2024 (4) TMI 274 - HC - GST

Refusal to rectify the assessment order passed under Rule 142 (5) of the C.G.S.T. Rules 2017 - denial of the Input Tax Credit (ITC) - HELD THAT - The law declared by the Court being retrospective and it being applicable to the assessment period in question the issue ought to have been examined with seriousness. Similarly merely because the assessing authority may not have been aware of the Circular of the CBIC when it passed the assessment order it may not have refused to apply its mind to that Circular upon correction application being filed. Primarily the decision of the Court being law declared and the Circular being the binding direction to apply the law an order passed contrary to such law or direction to apply the law would remain an order that may have experienced an error apparent on the face of record - the approach of the assessing authority is found to be erroneous. The matter is remitted to the assessing authority to pass a fresh reasoned order dealing with the rectification application filed by the petitioner and keeping in mind the observations made above. Since in the earlier decision of the Court time has been granted to the revenue and the GSTN to make compliance by 31.03.2024 let a fresh order be passed in terms of this order by 15.04.2024. Petition disposed off by way of remand.

Summary

Issues involved:
Challenge to orders dated 31.10.2023 and 30.01.2024 regarding refusal to rectify assessment order under Rule 142 (5) of the C.G.S.T. Rules, 2017.

Details of the judgment:
1. The petitioner challenged the orders dated 31.10.2023 and 30.01.2024, contending that the assessing authority refused to rectify the assessment order and denied the petitioner to avail Input Tax Credit (ITC) of Rs. 1,82,16,688/- with penalty, contrary to a previous judgment. The refusal to entertain correction application to delete penalty and interest, not in line with Circular No. 26/2017 issued by the CBIC, was also contested.

2. The Court acknowledged that the assessment order may not be sustainable based on the law declared by the Court and the CBIC Circular should have been given effect to, subject to pre-conditions. The assessing authority's failure to consider the High Court's order and the CBIC Circular rendered its decision unsustainable.

3. The Court emphasized that the law declared by the Court is retrospective and should have been applied to the assessment period in question. The assessing authority's ignorance of the CBIC Circular when passing the order did not justify the refusal to apply it upon receiving a correction application. Any order contrary to the law or directive would be erroneous.

4. Considering the fair statement by the revenue's counsel, the Court set aside the order dated 30.01.2024 and remitted the matter to the assessing authority for a fresh reasoned order, taking into account the Court's observations. The assessing authority was directed to pass a new order by 15.04.2024, keeping in mind the previous decision granting time for compliance by 31.03.2024.

5. Pending the fresh order, the disputed tax and penalty demands were to remain in abeyance. The writ petition was disposed of with the aforementioned directions.