GST appeal limitation periods start fresh after rectification rejection

The Hon'ble High Court of Madras held that where a rectification application under Section 161 of the CGST Act is rejected, the limitation period for filing an appeal against the original assessment order starts from the date of rejection of the rectification application and not from the date of the original assessment order.

Facts of the Case:

The Petitioner, Sri Ramajeyam Engineering Industries, received an assessment order dated August 19, 2024, from the Respondent, the Deputy Commissioner (ST). The Petitioner found that the Respondent had not dealt with the issue in a proper manner and had not given any reasons as to why the demand made in the show cause notice was affirmed. Consequently, the Petitioner filed a rectification application under Section 161 of the Central Goods and Services Tax Act, 2017, on November 18, 2024, seeking reconsideration based on their explanation.

The Respondent rejected the rectification application on November 22, 2024, without assigning any reasons. The Petitioner apprehended that if they filed an appeal against the original assessment order now, the appellate authority would calculate the period of limitation from the date of the original assessment order (August 19, 2024), which would render the appeal time-barred.

Aggrieved by the rejection of the rectification application and concerned about the limitation period, the Petitioner filed a writ petition challenging both the original assessment order dated August 19, 2024, and the order rejecting the rectification application dated November 22, 2024.

Issue:

Whether the limitation period for filing an appeal against the original assessment order starts from the date of rejection of the rectification application or from the date of the original assessment order.

Held by the Court:

The Hon'ble High Court of Madras in W.P.(MD). No. 30452 of 2024 held that:

1. After an assessment order has been made, Section 161 of the GST Act provides for an application to be made for rectification. Such rectification can be disposed of either in favor of the assessee or against them.

2. If any rectification is made as prayed for, the same would get merged into the original order.

3. Just because the rectification application has been rejected, the period of limitation to challenge the original assessment order cannot be said to begin from the date on which the original order was passed; it would only count from the date on which the order of rectification has been passed.

4. In the present case, since the original order of assessment was made on August 19, 2024, and the order rejecting the rectification was made on November 22, 2024, the period of limitation for challenging the assessment order shall start from November 22, 2024.

5. The Court clarified that when an appeal is filed by the assessee against the original order of assessment, the period of limitation shall be calculated from the date on which the rectification application was dismissed.

Relevant Sections:

Section 161 of the Central Goods and Services Tax Act, 2017/ Tamil Nadu Goods and Services Tax Act, 2017 - Rectification of mistakes

____________________________________________________

DISCLAIMER: The views expressed are strictly of the author and NLF Tax and Legal Advisory. The contents of this article are solely for informational purposes and for the reader’s personal non-commercial use. It does not constitute professional advice or a recommendation of the firm. Neither the author nor the firm and its affiliates accept any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing, and we reserve the legal right for any infringement on usage of our article or newsletter without prior permission