M/S Svaksha Distillery Limited And Anr vs. The Assistant Cmmissioner Of Wb State Tax, Barasat Charge And Ors

Held

The Court held that the Appellate Authority ought to have considered the petitioners' case in light of Section 16(5) of the GST Act and the notification dated October 8, 2024. The Court noted that while the Appellate Authority's initial order dated June 14, 2024, referred to Section 16(4) to confirm the adjudication order, its subsequent order dated June 30, 2025, bypassed this by stating the case was not related to Section 16(4). The Court found that the petitioners had filed their rectification application based on the notification issued under Section 148. Therefore, the impugned order dated June 30, 2025, rejecting the rectification application, was set aside. The matter was remanded to the Appellate Authority to consider the rectification application afresh, in accordance with law, particularly in light of Section 16(5) and the notification dated October 8, 2024. The petitioners were also granted liberty to pray for a refund of any sums recovered.

Facts

The petitioners, M/s. Svaksha Distillery Limited & Anr., are challenging an order dated June 30, 2025, by which the Appellate Authority rejected their request for rectification of a prior order dated June 14, 2024. The petitioners, engaged in ethanol manufacturing, had deferred claiming Input Tax Credit (ITC) for Financial Years 2018-19 and 2019-20, claiming it in the January-March quarter of Financial Year 2020-21. GST authorities issued a pre-show cause notice alleging excess ITC. The petitioners clarified the ITC pertained to earlier financial years, but this was not accepted. After adjudication and an unsuccessful appeal before the Appellate Authority, the petitioners sought rectification based on a notification dated October 8, 2024, issued under Section 148 of the GST Act, which provided a special procedure for rectification following the insertion of Section 16(5) with retrospective effect.

Key Issues

1. Whether the Appellate Authority erred in rejecting the petitioners' application for rectification of its order dated June 14, 2024, in light of the provisions of Section 16(5) of the West Bengal Goods and Services Tax Act, 2017/Central Goods and Services Tax Act, 2017, and the notification dated October 8, 2024, issued under Section 148 of the said Act. Petitioner's arguments: The petitioners contended that they were statutorily eligible to avail the deferred ITC under Section 16(5) of the Act and the subsequent notifications. They argued that their claim was lodged within the stipulated period of November 30, 2021, and therefore, the Appellate Authority should have allowed their rectification request. They relied on the special procedure notified for rectification. Revenue's arguments: The respondent State submitted that in terms of Section 16(5) of the Act, registered persons could avail ITC for Financial Years 2017-18 to 2019-20 if such persons had claimed the same within November 30, 2021. They did not explicitly argue against the rectification itself but presented the condition for availing ITC.