Limitation for appeal starts from rejection of rectification, not original assessment.

Issue: Whether the limitation period for filing an appeal against an original assessment order starts from the date of the original order or the date of rejection of a rectification application filed under Section 161 of the CGST Act.

Facts:

The assessee filed a rectification application under Section 161 of the CGST Act against an assessment order.
The revenue rejected the rectification application without assigning reasons.
The assessee apprehended that an appeal would be time-barred if the limitation period was calculated from the date of the original assessment order.

Decision:

The court held that where a rectification application is rejected, the limitation period for appeal against the original assessment order starts from the date of rejection of the rectification application, not the date of the original order.
The period of limitation to challenge the assessment order dated 19.08.2024 would start from 22.11.2024, the date of rejection of the rectification application.
The writ petition was disposed of, with liberty granted to the assessee to file an appeal.
The ruling was in favor of the assessee.

Key Takeaways:

The rejection of a rectification application under Section 161 triggers a new limitation period for filing an appeal against the original assessment order.
The limitation period does not run from the date of the original assessment order in such cases.
This ruling protects the assessee’s right to appeal, even when a rectification application is filed and subsequently rejected.
Section 161 of Central Goods and Services Tax Act, 2017/ Tamil Nadu Goods and Services Tax Act, 2017 applied to this case.

HIGH COURT OF MADRAS

Sri Ramajeyam Engineering Industries

Deputy Commissioner (ST)

K. Kumaresh Babu, J.

W.P.(MD). No. 30452 of 2024
W.M.P.(MD) Nos. 25590 and 25592 of 2024

DECEMBER 16, 2024

G. Thalaimutharasu for the Petitioner. R. Suresh Kumar, Additional Government Pleader for the Respondent.

ORDER

1. Heard Mr. G. Thalaimutharasu, learned counsel for the petitioner and Mr.R.Suresh Kumar, learned Additional Government Pleader for the respondent.

2. This Writ Petition has been filed challenging the impugned demand order dated 19.08.2024 and consequential impugned order of rejection of rectification dated 22.11.2024 and to consequently directing the respondent to reconsider and rectify based on the petitioner’s explanation dated 18.11.2024 in the light of the provisions of Section 161 of the Central Goods and Services Tax Act.

3. It is the case of the learned counsel for the petitioner that the respondent while passing the order of assessment had not dealt with the issue in a proper manner and had not given any reasons as to why the demand made in the show cause notice was affirmed. Hence, a rectification application had been filed before the respondent and again the same had been rejected without assigning any reasons. Therefore, he prays this Court to set aside the order impugned in the Writ Petition.

4. The learned Additional Government Pleader, on the other hand, submits that subsequent to the passing of the assessment order, the petitioner filed an application for rectification, which was duly considered by the respondent. He contends that upon examining the rectification application, it was evident that the petitioner had not furnished any documentary evidence to substantiate their claim, and consequently, the rectification application was rejected due to the absence of any apparent error on the face of the record. The Additional Government Pleader further submits that the petitioner has an available right of appeal against the said order and therefore prays this Court to dismiss the Writ Petition, allowing the petitioner to pursue their statutory remedy by way of appeal.

5. At this juncture, the learned counsel for the petitioner would submit that the appellate authority would insist on calculating the period of limitation from the date when the original assessment order was passed and in such case, the appeal would be much beyond the period of limitation and would apprehend that the appeal would not be entertained as it is being made beyond the period of limitation. After assessment order has been made, Section 161 of the GST Act provides for an application to be made for rectification. Such rectification can be disposed either in favour of the assessee or against him. If any rectification is made as prayed for, the same would get merged into the original order. Just because the rectification application has been rejected, the period of limitation to challenge the original assessment order cannot be said to begin from the date on which the original order was passed, it would only count from the date on which the order of rectification has been passed.

6. In the present case, the original order of assessment was made on 19.08.2024 and the order in rectification was made on 22.11.2024. Therefore, the period of limitation for challenging the order of assessment dated 19.08.2024 shall start ticking from the date of rejection of the rectification application i.e., from 22.11.2024. It is made clear that when the appeal is filed by the assessee as against the original order of assessment, the period of limitation shall be calculated from the date on which the rectification had been dismissed.

7. With the above said liberty, the Writ Petition is disposed of. No costs. Consequently, connected miscellaneous petitions are closed.