2022 (3) TMI 542 - HC - GST

Rectification application - Period of limitation u/s 161 - Extended period of limitation due to Covid in view of decision of Supreme Court - opportunity of personal hearing provided or not - principles of natural justice - HELD THAT - It is brought to the notice of this Court by the learned counsel for the petitioner in respect of the limitation, there could be no much quarrel from respondent side also as these all are the materials on records. Therefore, the limitation insofar as the petitioner is concerned, is saved by the orders of the Hon'ble Supreme Court of India, hence, on that ground mainly if the rectification application is rejected through the impugned order, the same shall not stand in the legal scrutiny. Insofar as the other reasons given of course on merits according to the respondent is concerned, the language used in Section 161 of the Act is that without prejudice to the provisions of Section 160 of the Act and notwithstanding anything contained in any other provisions of this Act . The words notwithstanding anything contained in any other provisions of this Act covers the entire provisions of the Act with the said non-abstante clause thereby all other issues or all other mandates under various provisions of the Act stand excluded when rectification proceedings initiated either suo motu or at the instance of any officer of the respondent/revenue or at the instance of an application filed in this regard by the affected party within three months period. In view of the saving of the limitation, since the application for rectification has been filed by the petitioner, the same shall be independently considered notwithstanding anything contained in any other provisions of the Act. The earlier show cause notices or notices for personal hearing issued to the petitioner, for which, the petitioner has not responded etc., cannot be cited as a reason for rejecting the rectification application as has been done in the impugned order. This Court has no hesitation to hold that the impugned order is liable to be set aside - the matter is remitted back to the respondent for reconsideration.

Summary

Issues:
1. Limitation period for filing rectification application under Section 161 of the GST Act.
2. Rejection of rectification application based on limitation and merits.
3. Non-response to show cause notices as a ground for rejecting rectification application.

Analysis:

Issue 1:
The petitioner filed a writ petition seeking a Writ of Certiorarified Mandamus to quash an assessment order demanding payment of wrongly transitioned Input Tax Credit (ITC) into the GST regime. The petitioner argued that the rectification application filed on 03.11.2021 falls within the extended limitation period granted by the Hon'ble Supreme Court of India, starting from 15.03.2020 and ending on 02.10.2021. The court agreed that the limitation period was saved by the Supreme Court's orders, thus rejecting the respondent's contention regarding the limitation.

Issue 2:
The respondent had rejected the rectification application not only on grounds of limitation but also on merits, citing non-response to earlier notices as a reason. However, the court held that the language in Section 161 of the Act allows for independent consideration of rectification applications, irrespective of other provisions. The court emphasized that the rectification process should be based on the merits of the case and not influenced by previous notices or lack of response. Therefore, the rejection based on merits was deemed invalid, and the impugned order was set aside.

Issue 3:
The respondent contended that the rejection of the rectification application was also based on the petitioner's failure to respond to earlier notices. However, the court clarified that the rectification process should be treated independently, without being influenced by past notices. The court emphasized that the language in Section 161 of the Act allows for a separate consideration of rectification applications, disregarding previous non-responses to notices. Consequently, the court held that the rejection based on the petitioner's non-response to earlier notices was not a valid ground, and the impugned order was set aside.

In conclusion, the court set aside the impugned order, remitting the matter back to the respondent for reconsideration. The court directed the respondent to independently assess the rectification application, giving the petitioner an opportunity to be heard, and dispose of the application within six weeks. The writ petition was disposed of accordingly, with no order as to costs.