Whether Original order or Rectified order issued under section 161 is invalied?

[vinod jadhav]

1. The Original Order-in-Original (OIO) was issued on August 2, 2024, without considering the reply to the Show Cause Notice (SCN).

2. A Rectification Application was filed within three months of the OIO, on October 24, 2024.

3. The department issued the Rectification Order on February 3, 2025.

As per the prescribed timeline, the Rectification Order should have been issued within six months, i.e., by January 29, 2025. However, it was issued beyond the statutory time limit, on February 3, 2025.

My question is,

1. Is the Original Order and Rectified Order issued under Section 161 invalid?

2. What are the repercussions of the Original Order being issued without considering the SCN reply and the Rectification Order issued delayed?

3.What benefits can the assessee avail in this case?

[Vijay kumar]

1. Invalid since statutory time limit has been exceeded. Like an OIO issued after the period specified u/s 73 and 74 is invalid, a rectification order beyond the time limit is non est in the eyes of law.

2. Ideally, an appeal should have been filed against the Original Order itself. Rectification is for error apparent on record, which may not include "non-consideration of the reply".  On the other hand, Dept may initiate recovery proceedings. 

3. In any case, since the authority has issued rectification order, better file appeal against the same, if it is adverse. If it is favorable to you but dept initiates recovery proceedings discarding the rectification order as invalid, better file a Writ in the High Court and seek appeal time or to validate the rectification order.

[KASTURI SETHI]

1. Is the Original Order and Rectified Order issued under Section 161 invalid ?

Ans. Yes. Both Orders are not in letter and spirit of GST laws because of non-consideration of reply to the SCN. Both the Proper Officers have committed an error.

2. What are the repercussions of the Original Order being issued without considering the SCN reply and the Rectification Order issued delayed ?

Ans. Non-consideration of the reply may lead to setting aside of both orders by the Appellate Authority or GST Tribunal on the basis basis of various High Court judgements.

3. What benefits can the assessee avail in this case ?

Ans. Both the Orders are appealable under Section 107

[KASTURI SETHI]

 Adjudication Order passed beyond time limit  is without jurisdiction and hence set aside -Allahabad High Court Reported as -

2024 (11) TMI 911 - ALLAHABAD High Court IN THE CASE M/S A.V. PHARMA THRU. ITS PROP. SMT. MADHU VOHRA VERSUS STATE OF U.P. THRU. PRIN. SECY. STATE TAX LKO. AND 2 OTHERS.

TMI Issue ID  761925

[KASTURI SETHI]

2024 (12) TMI 140 - MADRAS HIGH COURT - M/S. SPK AND CO, REPRESENTED BY ITS JOINT MANAGING PARTNER VERSUS THE STATE TAX OFFICER, MUTHUKULATHUR

Challenge to order of assessment and the order of rectification passed by the respondent - vague SCN - calculation of period of limitation from the date when the original assessment order was passed - HELD THAT:- After assessment order has been made, Section 161 of the GST Act provides for an application to be made for rectification. Such rectification can be disposed either in favour of the assessee or against him. If any rectification is made as prayed for, the same would get merged into the original order. Just because the rectification application has been rejected, the period of limitation to challenge the original assessment order cannot be said to begin from the date on which the original order was passed, it would only count from the date on which the order of rectification has been passed.

In the present case, the original order of assessment was made on 07.08.2024 and the order in rectification was made on 12.11.2024. Therefore, the period of limitation for challenging the order of assessment dated 07.08.2024 shall start ticking from the date of rejection of the rectification application i.e., from 12.11.2024. It is made clear that when the appeal is filed by the assessee as against the original order of assessment, the period of limitation shall be calculated from the date on which the rectification had been dismissed.

Petition disposed off.

AI Summary

Debate on Validity of GST Orders Under Section 161 Due to Procedural Errors and Time Limits; Appeal Suggested The discussion revolves around whether an original order and a rectified order issued under Section 161 are invalid due to procedural errors in a GST case. The original order was issued without considering the reply to the Show Cause Notice, and the rectification order was issued beyond the statutory time limit. Participants argue that both orders are invalid, suggesting that an appeal should have been filed against the original order. They recommend filing an appeal or a writ if the rectification order is adverse or if recovery proceedings are initiated. The orders are considered appealable under Section 107.