Crust Food Company vs. Assistant Commissioner Of Central GST(Division Vi)

Held

The High Court held that the Assistant Commissioner erred in rejecting the petitioner's rectification application. The Court found that the Assistant Commissioner's reasoning that entertaining the rectification application would circumvent the appeal period was not applicable, as the petitioner had also filed an appeal. The Court also noted that the Assistant Commissioner had not adequately explained why the petitioner's contention regarding the exemption for restaurant income was not an "error apparent from the record." Consequently, the impugned order rejecting the rectification application was set aside. The Assistant Commissioner was directed to pass a fresh order on the petitioner's rectification application, specifically addressing the petitioner's contention that the restaurant income was exempt and its inclusion for the period 2014-15 to September 2016 constituted an apparent error.

Facts

The petitioner, Crust Food Company, challenged an order dated 09.01.2018 passed by the Assistant Commissioner of Central GST, Ahmedabad. This order rejected the petitioner's application for rectification of a previous assessment order dated 08.05.2017. The original assessment order had confirmed a service tax liability of Rs. 18,34,192/- for the financial years 2011-12 up to September 2016, along with interest and penalties. The petitioner's rectification application, filed on 13.12.2017, argued that their restaurant income was exempt from tax. While the adjudicating authority acknowledged this exemption for 2011-12 to 2013-14, it was ignored for the period 2014-15 to September 2016, leading to the inclusion of this income in the taxable turnover.

Key Issues

1. Whether the Assistant Commissioner erred in rejecting the petitioner's application for rectification of the assessment order dated 08.05.2017, specifically concerning the non-consideration of exemption for restaurant income for the period 2014-15 to September 2016, under Section 74 of the Central Excise Act, 1944 (as applied to service tax). Petitioner's arguments: The petitioner contended that the omission to grant exemption for restaurant income for the latter period constituted an "error apparent from the record" that was rectifiable under Section 74. They argued that since the exemption was granted for the earlier period, its denial for the subsequent period was a clear mistake. Furthermore, the petitioner stated that they had also filed an appeal, thus the concern about circumventing the appeal period was not applicable. Revenue's arguments: The Assistant Commissioner, in his order, held that rectification under Section 74 is permissible only for a "mistake apparent from the record" and not for reopening an assessment that has become final under Section 73. He opined that allowing rectification in this case would amount to a "back door entry" to circumvent the appeal provisions under Section 85, especially if an appeal was not filed within the prescribed time limit.