2023 (11) TMI 1058 - HC - GST

Tax Credit Challenge: Input Tax Assessment Upheld After Failure to Contest Original Show Cause Notice Under Section 161

Sakkeena. C Proprietrix, M/s. Royal International Exports & Imports, Versus The State Tax Officer, Malappuram, The Commissioner, State Goods & Services Tax Thiruvananthapuram,

The SC upheld the tax authority's assessment order challenging excess input tax credit. The appellant's rectification application under section 161 of GST ... Seeking review of assessment order - Input Tax Credit - Even though statutory notices were issued to the appellant, she did not respond - violation of principles of natural justice - HELD THAT:- What is sought by the appellant, in effect, is the review of the said assessment order. The appellant made no case for rectification. The rectification under section 161 of the GST Act is permissible only when there are errors apparent on the face of the record, in a situation where the show cause notice was contested, which is not the case here. When a show cause notice is not contested, the resultant order passed assumes the nature of an agreed order and a rectification application will not lie to correct a factual mistake therein. There are no merit in the appeal - appeal dismissed. Issues Involved: Challenge to assessment order u/s 73(1) of CGST Act, rejection of rectification application u/s 161 of GST Act.Challenge to Assessment Order u/s 73(1) of CGST Act:The appellant, a business owner, challenged an assessment order by the 1st respondent regarding excess input tax credit claimed for the financial year 2017-18. Despite notices and opportunities for response, the appellant did not engage with the proceedings. The assessment order directed the appellant to remit the excess credit with interest and penalty. The appellant later submitted a rectification application under section 161 of the GST Act, claiming a mistake in the input tax credit claimed. The application was rejected, leading to the appellant challenging this rejection before the learned Single Judge. The Single Judge dismissed the petition, allowing the appellant to appeal the orders.Rejection of Rectification Application u/s 161 of GST Act:The appellant contended that the non-consideration of a specific return in the rectification application constituted a rectifiable error under section 161 of the GST Act. However, the Court found that the assessment order had already highlighted the excess input tax credit claimed by the appellant, which she admitted to. Despite discrepancies being communicated and opportunities given, the appellant did not respond or contest the show cause notice. The Court emphasized that rectification under section 161 is only for errors apparent on the face of the record, especially in contested cases. As the appellant did not contest the show cause notice, the order assumed an agreed nature, making rectification inapplicable. The appeal was dismissed, with the appellate authority directed to consider any statutory appeal filed by the appellant independently on merits.