Alagukannan vs. The Assistant Commissioner (St) (Fac)

Facts

The petitioner, Alagu Kannan, filed a writ petition challenging an assessment order dated March 9, 2023, passed by the Assistant Commissioner (ST)(FAC), Tenkasi Circle. The petitioner had inadvertently recorded CENVAT credit accrued on input purchases under the TNVAT Act in column 5(c) of Form TRAN-1, instead of column 7(a). The respondent issued a notice on October 3, 2019, stating no ITC was available in the last TNVAT returns, making the TRAN-1 credit ineligible. The petitioner became aware of the mistake upon receiving this notice. A rectified order reducing the penalty was passed on July 21, 2020. The petitioner filed a rectification application under Section 161, which was rejected by the respondent without a personal hearing, citing limitation and that the error was not self-evident.

Held

The Court held that the rectification application filed by the petitioner was within the period of limitation. The Court reasoned that the Supreme Court's suo motu order excluding the period from March 15, 2020, to February 28, 2022, extended the time for filing the application. The petitioner's application, filed on September 2, 2020, was therefore considered timely. Furthermore, the Court relied on its own previous judgment in W.P.No.1847 of 2022, which emphasized that the limitation for rectification applications is saved by Supreme Court orders. The Court also noted that Section 161 of the GST Act, with its non-obstante clause, allows for the independent consideration of rectification applications irrespective of other provisions. Consequently, the reasons cited in the impugned order for rejecting the rectification application, including limitation and the nature of the error, were found to be legally unsustainable. The Court quashed the impugned order and directed the respondent to reconsider the petitioner's case, granting an opportunity for a personal hearing, and to decide the rectification application on its merits within eight weeks.

Key Issues

1. Whether the rectification application filed by the petitioner under Section 161 of the GST enactments was within the period of limitation, considering the Supreme Court's suo motu order extending timelines? Petitioner's arguments: The petitioner contended that the rectification application was filed within the extended period of limitation as per the Supreme Court's suo motu order in Misc.Appl.No.665 of 2021 in Suo Motu Writ Petition (Civil) No.3 of 2020, which excluded the period from March 15, 2020, to February 28, 2022. The petitioner argued that the 90-day period for filing the rectification application, calculated from the assessment order dated January 6, 2020, would extend beyond May 30, 2022, and the application filed on September 2, 2020, was therefore within time. The petitioner also relied on a High Court judgment in W.P.No.1847 of 2022, which held that the limitation for rectification applications is saved by Supreme Court orders and that Section 161's non-obstante clause allows for independent consideration of rectification applications. Respondent's arguments: The judgment does not record any specific arguments made by the respondent regarding the limitation period or the interpretation of Section 161.