Rectification of the GST Order

[Bayyareddy DK]

My client is importer of goods and sells the goods locally. Recorded all the sales and purchases during the year 2019-2022. However, some eway bills not created by oversite. My sales are matching with Income tax returns, GST Annual returns and Form 3B sales & tax is paid fully. My declared turnover is higher than the Eway bill turnover for all the years. Officer passed an order U/s. 73(9) of the CGST Act without DIN number & levied the tax on the difference of turnover with Eway sales along with interest & penalty. Is the difference turnover again liable to GST Tax? Is it does not lead to double tax? Is this order rectifiable U/s. 161 of the CGST Act. Can the officer pass a rectification order reducing the liability? Please advice

[KASTURI SETHI]

Legally you can. Better option is to file an appeal against the above order. It is the discretion of the Adjudicating Authority whether to rectify or not. Meanwhile, your time for filing appeal will expire.

Your client is strong on merits with the entries in books of account, bank transactions etc.. Books of accounts are a statutory records. You can easily trace out case laws in your favour on this issue.

No use of challenging the non-mention of DIN on the order.

[Padmanathan KV]

I agree with Kasturi Ji.

Rectification request u/s 161 has a narrower scope as it is restricted to only those "errors which are apparent from the face of records". In other words, no legal issues and even those factual issues which are not apparent from face of records shall be entertained. i.e. purely clerical or arithmetical errors, errors by oversight etc will only be considered. (I do agree there are certain Decisions of court in Income Tax Law which has expanded scope of rectification but again it will have to be litigated.)

At this juncture, kindly note that the time limit for rectification and appeal are more or less same. Thus, if you file a request for rectification u/s 161 and fail to file appeal u/s 107 and in the unfortunate turn of events, the rectification request filed by you is rejected, you will be left without any remedy. (pls note in such situation if u file appeal against the order rejecting rectification request, the scope of appeal will be limited to only scope of rectification and not the actual merits of the case).

So long story short, even if you want to file rectification, it is better to simultaneously file an appeal as well and in case the rectification request is accepted by the officer, you can withdraw the appeal.

[Bayyareddy DK]

In case the rectification request is accepted by the officer who has passed the original order, can this order be reassessed by any other adjudicating officer under the GST law questioning the rectification facts in the order? Please advice

[KASTURI SETHI]

Yes. See Section 107(2) of CGST Act. This is applicable for rectification order also because the status of Order-in-Original exists even after rectification. The department has six months to file an appeal against any order, if aggrieved, whereas the party has three months.

Also see Section 108 --Powers of Revisional Authority.

[Padmanathan KV]

Agreed. The rectified order merges with original order. Dept can appeal or exercise revisional jurisdiction.

[Amit Agrawal]

Rectificatory application u/s 161 is ONLY for 'any error which is apparent on the face of record' (which is an extremely narrow in scope) and NOT because officer did not agree with your grounds of defence.

Why are you thinking of filing rectificatory application instead of filing appeal? Can you please explain ..... Because from facts of your query, I am not able to find any legally-valid justification for going to rectificatory route (instead of filing an appeal).

Further, Order with DIN - at best - is not a valid order (& thereby, there is nothing to rectify). Applying u/s 161 against such order is implicit agreement by you that it is a valid order.

Moreover, taking such stand (i.e. order is not valid due to non-availability of DIN) will hardly helps you as time-limit to issue valid order u/s 73 (10) is still available to Dept. for very substantial time as issue involved is year 2019-2022.

Unless and until you got very strong legally-valid justification for going to rectificatory route where you legally confident of getting the entire demand dropped (which does not seem so to me, from shared facts), it is better of file appeal and that too, within the time permissible.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

Kindly also note the followings:

A. Merely proving that "Your sales are matching with Income tax returns, GST Annual returns and Form 3B sales etc" is NOT sufficient.

B. This is because your declared turnover is higher than the E-way bill turnover for all the years and it was you who has created those E-way bills.

C. So, you also need to explain the believable reasons for the mistakes in generating those additional e-way bills along-with supporting evidences.

Kindly take help of an expert in drafting your appeal who will go through your submissions made till date and see whatever additional evidences and justifications available while drafting your appeal.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

If transactions are genuine and neat and clean, there is nothing to worry about. You can justify the difference before the Appellate Authority. It may be a recurring calculation error in E-way bills.

[Amit Agrawal]

I misunderstood factual position while sharing my views earlier. My apologies for the inconvenience!

Your declared turnover is higher (& NOT lesser) in Form GSTR-3B than the E-way bill turnover (as some e-way bills not created by oversite). And E-way bill is not required in few circumstances (such as involving value less than prescribed amount etc.)

I misunderstood the case is that of the mistake in generating additional e-way bills. This case is actually the opposite.

Now, what I have not understood is what is Dept's case / allegation in the SCN against you as you have paid more turnover as well as taxes than declared via e-way bills? And what are findings of original adjudicating authority for ignoring your submissions / grounds of defence while passing order u/s 73 (9) confirming tax, interest & penalty?

This is very difficult case to digest (probably, leading to my misunderstandings) and such factual position should not have lead to issuance of SCN itself.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

Agree with Amitji's last post. Absurd SCN indeed!!

Challenge the notice for no DIN and also on merits. There is no logic in this notice anyway.

[Padmanathan KV]

very true. It is a strange case indeed!

[KASTURI SETHI]

Although the following case law is pro-revenue, yet it has to be read so that the party should be well prepared to face adverse consequences.

2023 (3) TMI 533 - SUPREME COURT - THE STATE OF KARNATAKA VERSUS M/S ECOM GILL COFFEE TRADING PRIVATE LIMITED

AI Summary

Rectification under CGST Section 161 limited to apparent errors; file appeal simultaneously to preserve remedies and limitation.
An assessment order demanded tax, interest and penalty based on a turnover variance between declared returns and e-way bill records where some e-way bills were not generated; rectification under Section 161 is limited to errors apparent on record and will not substitute for challenging disputed factual or legal findings, so a contemporaneous appeal is advisable while assembling books, bank records and reconciliations to support the taxpayer's position.