Tvl. New Golden Agency vs. The Assistant Commissioner (St) (Fac)

Facts

The petitioner, Tvl. New Golden Agency, filed a writ petition challenging an assessment order dated January 31, 2024, passed by the Assistant Commissioner (ST) (FAC). This order confirmed a demand proposed in a notice dated September 27, 2023, by invoking Rule 86B of the TN GST Rules, 2017, and Section 74 of the respective GST enactments. The petitioner argued that Rule 86B was introduced with effect from January 1, 2021, and therefore could not be applied to the assessment year 2017-18. The petitioner had also failed to reply to the show cause notice but had attempted to rectify the order by filing applications under Section 161 of the GST enactment, which were rejected. The entire disputed amount had been recovered by the respondent.

Held

The Court held that the respondent erred in invoking Rule 86B of the TN GST Rules, 2017, for the assessment year 2017-18. The Court reasoned that Rule 86B was introduced vide Notification No.94/2020-CT dated December 22, 2020, with effect from January 1, 2021. Applying a rule that came into effect much later to a period prior to its introduction is legally unsustainable. The Court found merit in the petitioner's submission that the assessment order was passed without proper application of mind and was therefore illegal. The ratio decidendi is that statutory provisions, especially those imposing restrictions or liabilities, cannot be applied retrospectively unless explicitly stated. The Court set aside the impugned order and remitted the case back to the respondent to pass a fresh order on merits, taking into consideration that Rule 86B was introduced only in 2020 with effect from January 1, 2021. The respondent was directed to pass the fresh order within six weeks from the date of receipt of a copy of this order.

Key Issues

1. Whether the respondent erred in invoking Rule 86B of the TN GST Rules, 2017, for the assessment year 2017-18, when the said rule was introduced with effect from January 1, 2021? (Question of law) Petitioner's Contentions: The petitioner contended that Rule 86B of the TN GST Rules, 2017, was introduced vide Notification No.94/2020-CT dated December 22, 2020, and became effective from January 1, 2021. Therefore, it could not be applied retrospectively to the assessment year 2017-18. The petitioner argued that the assessment order was cryptic, showed non-application of mind, was non-speaking, illegal, arbitrary, and without jurisdiction due to the improper application of Rule 86B. The petitioner also highlighted that despite failing to reply to the show cause notice, their subsequent applications under Section 161 for rectification were rejected, and the disputed amount had already been recovered. Respondent's Contentions: The judgment does not record any specific contentions made by the respondent. However, the respondent passed the impugned assessment order.