2025 (9) TMI 969 - HC - GST

Order rejecting rectification under Section 161 GST set aside for clerical error; authority directed to permit correction under Section 73

HC found a clerical error in uploaded figures (Rs.1,07,916.48 recorded as Rs.1,07,91,648.00), set aside the order dated 17 May 2025 rejecting a ... Rectification of mistake - error apparent on the face of record or not - rejection application as time barred - this mercy petition is filed to afford one chance to explain before the Proper Officer for correction of error in feeding the figures in the system - HELD THAT:- Since this Court finds that due to error in feeding and uploading, the figures “Rs. 1,07,916.48” has been disclosed as “Rs. 1,07,91,648.00.”. Such error needs to be corrected. Hence, the petitioner is liable to be granted an opportunity by the authority concerned for carrying out necessary correction and give consequential effect thereto. It is perceived that human errors and mistakes are normal and such errors of clerical/arithmetical nature are liable to be allowed for correction. In view of aforesaid conceded position in the foregoing paragraph, and in the peculiar facts and circumstances of the case, this Court, exercising extraordinary discretionary jurisdiction sets aside order dated 17th May, 2025 rejecting the application for rectification under Section 161 of the GST Act. The matter is now remitted to the Assistant Commissioner of State Tax, CT and GST Circle, Cuttack-I, Central Circle, Cuttack who shall, in consideration of the petition for rectification of mistake found justified for correction by the authority vide report dated 26th August, 2025, allow the petitioner to rectify the mistake crept in the return and the authority shall modify the order under Section 73 of the GST Act accordingly. The authority concerned shall complete the exercise within a period of four weeks from the date of receipt of copy of this order. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether an application under Section 161 (rectification of mistake) of the GST Act is maintainable where an assessing authority has rejected the application as time-barred. 2. Whether a clerical/arithmetic error in online GSTR-3B filing (omission of decimal point producing an excessive Input Tax Credit claim) can justify rectification under Section 161 and consequent modification of an assessment/order passed under Section 73 of the GST Act. 3. Whether, and to what extent, the Court may exercise extraordinary writ jurisdiction to direct the revenue authority to permit correction of human error in GST returns and to modify an order under Section 73 accordingly. 4. Whether delay in preferring appeal under Section 107(4) can bar relief where rectification under Section 161 is later sought and when the appellant was prevented from earlier appearance. ISSUE-WISE DETAILED ANALYSIS Issue 1: Maintainability of Section 161 rectification application when rejected as time-barred Legal framework: Section 161 of the GST Act permits rectification of mistakes apparent from record. Separate statutory limitation and appellate provisions (e.g., Section 107(4)) govern appeals against assessment orders. Precedent treatment: The judgment does not cite or rely upon any prior binding authority; the Court proceeded on statutory text and factual matrix. Interpretation and reasoning: The Court examined the nature of the error (clerical omission of a decimal point) and found prima facie that the mistake was 'apparent from the record' because the correct figures were reflected in purchase registers, invoices and supplier-uploaded returns. The Assistant Commissioner rejected the rectification application solely on limitation grounds; however, on the material produced and on judicial scrutiny, the mistake was shown to be manifest and caused by human error rather than deliberate misstatement. The Court concluded that where a rectification petition shows prima facie verifiable clerical error, the authority ought to consider substance over procedural bar and permit verification and correction. Ratio vs. Obiter: Ratio - where a rectification application under Section 161 discloses a manifest clerical/arithmetic error supported by documentary matching (invoices, purchase register, supplier data), the authority should be directed to allow rectification notwithstanding an initial summary rejection on limitation, subject to verification. Obiter - general comments on mercy or equitable considerations in tax matters. Conclusions: Section 161 application was held maintainable for consideration; the Court set aside the authority's rejection and remitted the matter for verification and correction. Issue 2: Clerical/arithmetic error in GSTR-3B (decimal omission) - suitability for rectification under Section 161 and effect on assessment under Section 73 Legal framework: Section 161 (rectification) addresses mistakes apparent from record; Section 73 authorises determination of tax and demand where input tax credit is wrongly availed. The interplay requires that where the error is clerical and verifiable, rectification may alter the basis of demand under Section 73. Precedent treatment: No prior judicial authorities were invoked; Court relied on statutory purpose and documentary reconciliation. Interpretation and reasoning: The Court compared figures in purchase registers, invoices and GSTR-2B with the GSTR-3B filing and found that (a) purchase register and supplier figures showed ITC of Rs. 1,07,916.48; (b) GSTR-3B mistakenly recorded Rs. 1,07,91,648.00 (omission of decimal/point); (c) the excess resulted from human/clerk error; and (d) the petitioner had reversed the excess ITC subsequently in returns. Given this demonstrable mismatch and documentary corroboration, the error qualified as one 'apparent from record' and could be rectified; consequently the demand under Section 73 was founded on the erroneous entry and required modification after corrective exercise by the assessing authority. Ratio vs. Obiter: Ratio - a manifest clerical error in electronic GST filing that is demonstrably inconsistent with source documents and supplier data is rectifiable under Section 161 and can form the ground for modification of a demand under Section 73 once verified. Obiter - observations that human errors are normal and clerical/arithmetical mistakes should ordinarily be permitted correction. Conclusions: The Court directed that the assessing authority allow correction of the mistaken figure and modify the Section 73 order accordingly after verification within a specified timeline. Issue 3: Scope of extraordinary writ jurisdiction to direct rectification and remand to revenue authority Legal framework: High Court's writ jurisdiction to issue directions in public law matters where statutory remedies are exhausted, inadequate, or where procedural rejection defeats substantive rights; power to set aside administrative decisions and remit for fresh consideration. Precedent treatment: Not cited; the Court applied supervisory jurisdiction to prevent miscarriage of justice where prima facie documentary proof of clerical error existed and the authority had mechanically rejected the rectification application. Interpretation and reasoning: The Court found that exceptional facts - inadvertent decimal omission, corroborative ledger/invoice figures, reversal entry in subsequent return, and initial procedural denial of hearing - justified exercise of extraordinary jurisdiction to secure effective remedy. The Court balanced procedural regularity against substantive justice: it preserved the pending writ, set aside the rejection order, directed appearance with records, required verification by the authority (matching supplier uploads, tax invoices, books), and mandated completion within defined timelines to prevent delay. The Court emphasised cooperative conduct by the taxpayer and refused to condone unnecessary adjournments. Ratio vs. Obiter: Ratio - where a taxpayer demonstrates prima facie verifiable clerical error and the authority has rejected rectification on technical grounds preventing effective redress, the Court can set aside the rejection and remit for verification and correction within a limited time. Obiter - guidance on cooperative conduct and timeline enforcement. Conclusions: The Court exercised writ jurisdiction to order correction procedure, directed the authority to verify and modify the assessment under Section 73, and imposed a four-week completion timeline from receipt of the order. Issue 4: Effect of delay in filing appeal under Section 107(4) and interplay with rectification remedy Legal framework: Section 107(4) prescribes limitation for appeals from orders; rectification under Section 161 is a distinct statutory remedy addressing mistakes apparent from record. Precedent treatment: None cited. Interpretation and reasoning: The Court noted that an appeal under Section 107(4) had been rejected for delay but treated that procedural infirmity separately from the rectification claim. The Court accepted that circumstances prevented earlier appearance and that the rectification ground arose from a clerical mistake that could be demonstrated only after scrutiny of records; accordingly, prior dismissal of appeal for delay did not preclude consideration of a bona fide rectification petition where the mistake was apparent from record and verified. The relief granted did not overturn the appeal rejection per se but afforded the petitioner a corrective process addressing the substantive error underlying the demand. Ratio vs. Obiter: Ratio - dismissal of an appeal for delay does not automatically defeat a properly made and verifiable rectification application under Section 161; the two remedies are distinct and may operate independently where justified by the facts. Obiter - none beyond the immediate factual interplay. Conclusions: The Court remitted the matter for rectification despite prior dismissal of the appeal for delay, ordering verification and modification of the Section 73 order where the rectification was found justified. Cross-References and Practical Directions 1. The Court required the petitioner to appear with books, invoices and copies of returns for verification and directed the authority to match supplier-uploaded figures with tax invoices and books of account (see Issue 2 analysis above). 2. Time-bound directions: appearance by a specified date, completion of verification and corrective exercise within a specified period (four weeks from receipt of the Court's order), and furnishing a report to the Court were mandatory measures to ensure expedited remedy (linked to Issues 1 and 3). 3. Emphasis on cooperative conduct by the taxpayer and prohibition of unnecessary adjournments - procedural safeguards to prevent abuse of the corrective process (linked to Issue 3).