Composite Demand Order Covering Multiple Years Amnesty Set Aside, Separate Orders Mandated for Scheme Benefits

Composite Demand Order Covering Amnesty- Covering Multiple Years Set Aside, Separate Orders Mandated for Scheme Benefits

Issue:

Whether a single composite Order-in-Original issued under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act), covering multiple financial years, including those eligible for the Amnesty Scheme introduced via Section 128A, is valid, and if such an order is prejudicial to the assessee’s right to avail the scheme’s benefits.

Facts:

The assessee challenged an Order-in-Original dated November 22, 2023, issued under Section 73 of the CGST Act. This order covered demands for multiple financial years, some of which, specifically 2017-18 to 2019-20, were eligible for the benefits of the Amnesty Scheme introduced through Section 128A of the CGST Act (as per Notification No. 9/2023 dated March 31, 2023). The assessee contended that issuing a single composite order for all years, including the amnesty-eligible ones, was prejudicial to their rights, as it prevented them from separately applying for and availing the benefits of the Amnesty Scheme for the relevant periods.

Decision:

The court ruled in favor of the assessee. It held that since the impugned order covered multiple financial years, including those eligible under the Amnesty Scheme, the matter should be remitted back for de novo consideration. The authority was directed to pass separate orders for each financial year. The assessee was explicitly allowed to avail the benefits of the Amnesty Scheme for the eligible years. Liberty was also reserved for the assessee to approach the Court for the other periods if needed. The Writ Petition was allowed.

Key Takeaways:

• Amnesty Scheme Benefits: The Amnesty Scheme (Section 128A, read with Notification No. 9/2023) is intended to provide relief for specific past periods, allowing assessees to regularize their tax affairs with reduced penalties or other concessions.
• Prejudice by Composite Order: A single, composite demand order covering both amnesty-eligible and non-eligible periods can indeed be prejudicial to an assessee. It complicates the application of the scheme, as the assessee might not be able to easily segregate the demand attributable to the amnesty period.
• Necessity of Separate Orders: To facilitate the smooth operation of schemes like the Amnesty Scheme, adjudicating authorities should issue separate orders for each financial year, especially when some years fall under special relief provisions. This ensures clarity and enables assessees to exercise their rights effectively.
• Remand for De Novo Consideration: When a procedural flaw (like the composite order affecting statutory benefits) renders an order unsustainable, the matter is typically remanded for fresh consideration (de novo) to ensure that the assessee is not deprived of legitimate benefits.
• Facilitating Compliance: The judgment promotes a fair and taxpayer-friendly approach, ensuring that procedural aspects of demand orders do not inadvertently nullify the benefits provided by government-introduced amnesty schemes.