Madurai Bench of Madras HC: Limitation for Appeals Starts from Rectification Order

Background

The Petitioner, M/s. SPK and Co, filed writ petitions challenging both the assessment order and the rectification order issued by the Respondent for the years 2019-2020 and 2022-2023. The primary contention was that the Show Cause Notice ("SCN") issued by the Tax Authorities was vague. The Petitioner subsequently filed a rectification application to address certain issues in the assessment. However, the rectification application was dismissed, as the grounds raised in it were considered challenges to the original assessment order.

The Hon'ble High Court observed that since the issue of the vagueness of the SCN had already been addressed and acted upon, it could not be raised again in the current writ petition. The remaining grounds, which were related to the merits of the assessment order, were advised to be taken up with the appropriate authority.

In light of this, the Petitioner expressed concern that the appellate authority might calculate the limitation period from the date of the original assessment order. If that happened, the appeal would be filed after the expiration of the limitation period, and the Petitioner feared the appeal would not be entertained.

The Key Issue

The key question in this case was whether the limitation period for filing an appeal against the original assessment order should start from the date of the original order or from the date the rectification application was rejected.

Provision for rectification of errors apparent on the face of record under GST

Section 161, which allows authorities to rectify errors in decisions, orders, notices, certificates, or any other documents if such errors are apparent on the face of the record. The key points of this section are;

• Any authority, who has passed or issued any decision or order or notice or certificate or any other document, may rectify any error which is apparent on the face of record in such decision or order or notice or certificate or any other document, either on its own motion or where such error is brought to its notice by any officer appointed under GST Act.
• The rectification must be done within three months from the date of issuance of the decision, order, notice, certificate, or document.
• No rectification shall be made after six months from the date of issuance of the decision, order, notice, certificate, or document.
• The six-month limitation does not apply in cases where the rectification is due to a clerical or arithmetical error arising from an accidental slip or omission.
• If the rectification adversely affects any person, the authority must follow the principles of natural justice during the rectification process.

Under this section, an application can be made to rectify errors in the original decision, order, notice, or certificate. The rectification may result in an order that is either in favour of the taxpayer or against him. If the rectification is granted, the rectification order merges with the original order, ensuring that the rectified order becomes part of the official record.

Hon'ble High Court Ruling

The Madras High Court categorically held that 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.

In the present case, the original order of assessment was made on 07.08.2024 and the order in rectification was made on 12.11.2024. Therefore, the period of limitation for challenging the order of assessment dated 07.08.2024 shall start ticking from the date of rejection of the rectification application i.e., from 12.11.2024. It is made clear that when the appeal is filed by the assessee as against the original order of assessment, the period of limitation shall be calculated from the date on which the rectification had been dismissed.

Conclusion

The court's ruling clarified that the limitation period for filing appeals starts from the rejection of the rectification application, not from the original assessment order. This judgment protects the taxpayer's right to a fair review and establishes clear guidance on the timeline for filing appeals in cases where a rectification order has been issued.

Source: Judgment of the Madurai Bench of Madras High Court, W.P.(MD) Nos. 27787 and 27788 of 2024 & W.M.P.(MD) Nos. 23585 and 23586 of 2024.