Asir Automobiles Private Limited v. Deputy Commissioner (ST) (Madras High Court)

Summary: In the case of Asir Automobiles Private Limited v. Deputy Commissioner (ST)the Madras High Court considered the legal implications of conflicting orders issued by different authorities regarding tax demands. The petitioner, Asir Automobiles, has challenged two assessment orders related to the Goods and Services Tax (GST). The first order, dated August 16, 2023, upheld a tax claim although the petitioner canceled credits for returned supplies, which were supported by vendor credit notes. The second order, issued on November 7, 2023, denied the request to rectify the errors alleged in the first order. The petitioner argued that he did not benefit from the input tax credit on ineligible inputs, pointing out that the Deputy Commissioner overlooked key facts during the assessment process. The crux of the issue was whether two different authorities could simultaneously issue conflicting orders – one upholding a request while the other abandoned it. The Court found such an approach unreasonable, leading to the decision to set aside the challenged orders. The matter was referred back to the Deputy Commissioner for reassessment, highlighting the need for a new order taking into account all relevant submissions and evidence. The Court required that this procedure be completed within three months and demanded that the applicant be given a fair trial during the pre-trial detention proceedings.

Introduction: The Hon’ble High Court of Madras in the case of Asir Automobiles (P.) Ltd. c. Deputy Commissioner (ST), Tuticorin (Written Application (MD) Nos. 3785 to 3789 of 2024 dated 24th July, 2024) held that when the assessee had canceled the credit availed on the returned supplies for which the supplier had issued the credit note, but without considering the same, the Authority confirmed the claim and further, two orders were placed by the two different authorities, one for confirming the request and one for abandoning the request. Therefore, the assessment order was set aside and the matter had to be remanded for a new order to be passed.

Facts:

M/s Asir Automobiles (P.) Ltd (“the petitioner”) had challenged the assessment order dated August 16, 2023 (“the contested Order-1”) and the correlative order of November 7, 2023 (“the contested Order-2”) adopted under section 161 of the Central Goods and Services Act, 2017 (“the CGST Act”) rejecting the Petitioner’s request for rectification of the alleged errors committed in compliance with the impugned Order-1.

The petitioner canceled the credit given on the returned supplies for which the supplier had issued the credit note. The deputy commissioner (“the defendant”) without taking it into account, had issued a request for contested orders 1 and 2.

The petitioner has never availed the input tax credit. (“CTI”) on non-eligible inputs in the form of blocked credits. While the motion was pending, defendant adopted a new order dated March 31, 2024, to dismiss the claim.

Therefore, aggrieved by the impugned orders, the petitioner filed a petition before the Hon’ble Madras High Court.

Issue:

Can the two different authorities adopt the two orders of confirmation of demand and reduction of demand?

Detained:

The Hon’ble Madras High Court, in the case Written Miscellaneous Petitions (MD) n° 3785 to 3789 of 2024 held as follows:

• It was held that two different orders were passed by the two different authorities, one to uphold the application and the other to abandon the application, which is unreasonable. Therefore, the impugned orders were set aside and the matters were remanded back to the respondent to pass a new order within three months.

Our comments:

Section 161 of the CGST Act governs “Rectification of apparent errors in the file“. It specifies that without prejudice to the provisions of Article 160, and notwithstanding anything contained in any other provision of this Act, any authority, which has taken or issued a decision or order or notice or certificate or any other document, may rectify any error which is apparent from the record in any such decision or order or opinion or certificate or any other document, either on its own initiative or when such error is brought to its attention by any officer appointed under of this Act or an officer appointed under the State Property Act. and services or an officer appointed under the Union Territory Goods and Services Tax Act or by the person concerned within a period of three months from the date of issuance of such order, order, notice, certificate or any other document, as applicable. maybe:

However, no such rectification may be made after a period of six months from the date of issue of such decision or order or opinion or certificate or any other document:

Furthermore, the said six-month period will not apply in cases where the rectification is purely in the nature of the correction of a clerical or calculation error, resulting from an accidental slip or omission:

Provided further that where such rectification is prejudicial to any person, the principles of natural justice shall be followed by the authority making such rectification.

FULL TEXT OF THE MADRAS HIGH COURT JUDGMENT/ORDER

By this common order, all such written petitions are disposed of.

2. In these writ petitions, the petitioner has challenged the respective assessment orders dated 16.08.2023 and the consequential order passed under Section 161 of the TNGST Act, 2017, dated 07.11.2023, rejecting the application of the applicant for rectification of the alleged errors. committed in the respective assessment orders dated 16.08.2023.

3. Petitioner stated that he canceled the credit given on returned reviews for which the supplier issued a credit note. However, without considering the same, the respondent had confirmed the application through impugned orders for the respective assessment years.

4. This apart, it is submitted that the petitioner never availed the input tax credit on the inputs not eligible as blocked credits. However, the respondent ignored the same despite the fact that the petitioner had uploaded the information giving the details. It is submitted that post facto, during the pendency of the present writ petitions, the Deputy Commissioner (ST) (IU) passed fresh orders, all dated 31.03.2024, dropping most of the issues.

5. In view of the above, the learned counsel for the petitioner submits that the impugned orders in these writ petitions may be set aside and the matters may be remanded back to the respondent for passing a fresh order in the terms of the following orders for the Years of assessment.

6. The petitioner’s arguments appear reasonable inasmuch as there are two orders, one upholding the application and the other abandoning the application emanating from two different authorities. In these circumstances, the impugned orders are set aside and the cases are remanded back to the respondent for making a fresh order in the light of the aforesaid orders passed by the Deputy Commissioner (ST) (IU). This exercise may be carried out by the respondent as soon as possible, preferably within three months from the date of receipt of a copy of this order. It goes without saying that the applicant will also be heard before passing final orders in the referral proceedings.

7. These written petitions are granted under the above conditions. No fees. Therefore, the related miscellaneous petitions are closed.

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