Rectification power cannot be used to review an earlier order or enhance penalty beyond an apparent mistake.

Rectification power under Section 74 of the Finance Act is confined to correcting obvious mistakes apparent on the record, such as clerical, arithmetical or grammatical errors. It cannot be used as a review mechanism or as a basis for fresh merits-based reconsideration of an earlier order. A subsequent order enhancing penalty was therefore outside the scope of rectification jurisdiction and could not be sustained. The enhanced penalty order was rightly set aside because it exceeded the limited corrective power conferred by the provision.

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Issues: Whether the authority exercising rectification power under Section 74 of the Finance Act could, in the guise of correcting a mistake apparent on the record, review its earlier order and enhance the penalty.

Analysis: The rectification jurisdiction is limited to correcting obvious, patent mistakes such as clerical, arithmetical or grammatical errors. It does not confer a power of review or authorise a fresh merits-based reassessment of the earlier decision. Since the subsequent order enhancing the penalty went beyond correction of an apparent mistake, it was not sustainable under Section 74.

Conclusion: The rectification order enhancing the penalty was beyond jurisdiction and was rightly set aside.

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