Rectification is warranted due to contradictory orders issued by the GST Department on the same issue

The Hon’ble Kerala High Court in the case of M/S. WINTER WOOD DESIGNERS & CONTRACTORS INDIA PVT. LTD VERSUS THE STATE TAX OFFICER WORKS CONTRACT, OFFICE OF THE JOINT COMMISSIONER, SGST DEPT. THE STATE TAX OFFICER THE JOINT COMMISSIONER OFFICE OF THE JOINT COMMISSIONER OF STATE TAX, TAXPAYER SERVICES, SGST DEPT, DEPUTY COMMISSIONER (ARREAR RECOVERY) OFFICE OF THE JOINT COMMISSIONER, TAXPAYER SERVICES, ERNAKULAM - 2025 (6) TMI 1251 - KERALA HIGH COURT held that non-invocation of powers of rectification was not proper, where there was duplication of orders based on two proceedings initiated alleging same irregularities, there was an error apparent on record. Therefore, authority ought to have invoked powers of rectification under Section 161 of the Central Goods and Services Tax Act, 2017(“the CGST Act”), as error was brought to its notice within statutory period.

Facts:

Winter Wood Designers & Contractors India (P.) Ltd. (“the Petitioner”) was a private limited company having registration under the provisions of the CGST Act.

In an assessment pertaining to the Financial Year (“F.Y.”) 2017-2018 certain discrepancies were found, following which a Show Cause Notice (“SCN”) dated October 18, 2021 was served upon the Petitioner, to which a reply was submitted by the Petitioner on time.

The proceedings thereon were finalized under Sections 73 and 74 of the CGST Act, dropping the proceedings proposed, after accepting the explanation offered by the Petitioner. However, simultaneously, yet another SCN was also issued by yet another officer, pointing out the very same discrepancies.

The said SCN dated September 28, 2023, resulted in an Order (“the Impugned Order -1”), wherein the explanation offered by the Petitioner was rejected and the proceeding was finalized against the Petitioner. The proceedings were dropped by an Order dated December 08, 2023 whereas, the Impugned Order-1 which was passed against the Petitioner is dated December 30, 2023.

Immediately thereafter, the Petitioner submitted rectification application, before the State Tax Officer (“the Respondent”) who passed the Impugned Order-1, highlighting this discrepancy, relating to the duplication of the order. The rectification application was submitted on February 01, 2024 by way of an email. Thereafter as there was no response, representations were submitted.

Ultimately, the Respondent, passed an Order dated January 27, 2025 (“the Impugned Order-2”), wherein, the Respondent accepted the mistake of duplication but rejected the request placed by the Petitioner, on the ground that, as the Petitioner did not submit a rectification application by uploading through a GST Portal, within the statutory period of six months as contemplated under Section 161 of the CGST Act. Hence, no interference could be made.

The Petitioner was aggrieved by the Impugned Order-2, by which the rectification sought by the Petitioner, in respect of the Impugned Order-1, was rejected based on the reason that that Petitioner failed to submit the rectification application within the statutory period of six months as contemplated under Section 161 of the CGST Act.

Hence, aggrieved by the Impugned Orders, the Petitioner filed the present writ petition.

Issue:

Whether rectification is warranted due to contradictory orders issued by the GST Department on the same issue?

Held:

The Hon’ble Kerala High Court in M/S. WINTER WOOD DESIGNERS & CONTRACTORS INDIA PVT. LTD VERSUS THE STATE TAX OFFICER WORKS CONTRACT, OFFICE OF THE JOINT COMMISSIONER, SGST DEPT. THE STATE TAX OFFICER THE JOINT COMMISSIONER OFFICE OF THE JOINT COMMISSIONER OF STATE TAX, TAXPAYER SERVICES, SGST DEPT, DEPUTY COMMISSIONER (ARREAR RECOVERY) OFFICE OF THE JOINT COMMISSIONER, TAXPAYER SERVICES, ERNAKULAM - 2025 (6) TMI 1251 - KERALA HIGH COURTheld as under:

• Observed that, the fact that the Petitioner had intimated by way of email, which is within the statutory period contemplated under Section 161 of the CGST Act As far as the invocation of the powers under Section 161 of the CGST Act is concerned, it is not confined to a situation where, the aggrieved party approaches the authority with an application for rectification. When an error is brought to the notice of the officer concerned or otherwise the officer becomes aware of such error which is apparent on the face of record, the officer concerned can suo motu initiate the proceeding of rectification as well.
• Noted that, since there is admittedly a duplication of the orders based on two proceedings initiated alleging the same irregularities, there was an error apparent on the face of the records as far as the Impugned Order-1 is concerned. Therefore, it is a matter which ought to have been rectified as it results in two mutually conflicting orders passed on the same issue by the Officers of the same Department. The first order passed, by the officer concerned accepting the explanation offered by the Petitioner, the second order i.e.  the Impugned Order-1, was contrary to the findings in the first order, could not have been passed. Therefore, when such a serious error was clearly pointed out before the competent authority, within the statutory period contemplated under Section 161 of the CGST Act for rectification, such authority could not have refrained from invoking the powers of rectification.
• Held that, in view of the fact that receipt of rectification application was admitted and also that the same was within the statutory time, non-invocation of the powers of rectification under Section 161 of the CGST Act by the Respondent was not at all proper. Therefore, the reason which formed the basis of the Impugned Order-2, by which the request of the Petitioner was declined, cannot be said to be legally sustainable. Hence, the writ petition was disposed of and the Impugned Orders were quashed.

Our Comments:

Section 161 of the CGST Act governs “Rectification of errors apparent on the face of record.”. Section 161 of the CGST Act prescribes that without prejudice to the provisions of Section 160 of the CGST Act which governs “Assessment proceedings, etc., not to be invalid on certain grounds.”, and notwithstanding anything contained in any other provisions of the CGST Act, 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 the CGST Act or an officer appointed under the State Goods and Services Tax Act, 2017 (“the SGST Act”) or an officer appointed under the Union Territory Goods and Services Tax Act, 2017(“the UTGST Act”) or by the affected person within a period of three months from the date of issue of such decision or order or notice or certificate or any other document, as the case may be. However, no such rectification shall be done after a period of six months from the date of issue of such decision or order or notice or certificate or any other document and the said period of six months shall not apply in such cases where the rectification is purely in the nature of correction of a clerical or arithmetical error, arising from any accidental slip or omission. Where such rectification adversely affects any person, the principles of natural justice shall be followed by the authority carrying out such rectification.

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