Section 161

[UmeshBabu J]

Hi all,

Client received an adjudication order U/s 73 demanding Tax from the Proper Officer (Audit), But prior to the adjudication, enforcement had raised the same issue and accepted the liability payment in GSTR-3B next financial year. The audit officer did not give opportunity of being heard before passing the order.

Assessee filed appeal. To avail benefit U.s 128A, withdrew the appeal and filed SPL-02. The officer is given SCN for rejecting application in Form SPL-03.

Whether the adjustment of liability not done by the department can be rectified U/s 161, though beyond time period. Whether it is apparent mistake?

Thanks

[YAGAY andSUN]

This is a nuanced situation involving duplicate tax proceedings (Enforcement & Audit), natural justice violations, and rectification under Section 161 of CGST Act. Let’s break it down step-by-step:

✅ Key Facts Recap:

1. Enforcement Proceedings:
   • Raised tax demand (same issue).
   • Tax was paid voluntarily via GSTR-3B in the next financial year.
   • Liability accepted and discharged.
2. Audit Proceedings:
   • Audit officer passed an order under Section 73, without providing opportunity of being heard (natural justice violation).
   • Resulted in duplicate tax demand.
3. Appeal & Withdrawal:
   • Assessee filed an appeal, later withdrew it to avail benefit under Section 128A (presumably for reduced penalty).
   • Filed SPL-02 application for relief under Section 128A.
   • Department issued SCN in SPL-03, proposing to reject the application.

💡 Issues to be Resolved:

(A) Can the Tax Paid in GSTR-3B (Earlier) be Adjusted in the Later Order?

Yes. If the tax on the same issue has already been discharged voluntarily under GSTR-3B, the Audit Officer ought to have adjusted the same in his order.

• Not doing so is against CBIC circulars and principles of natural justice.
• It amounts to double taxation.
• Payment through GSTR-3B is a valid mode of discharge under GST.

(B) Can This be Considered an “Apparent Mistake” Rectifiable Under Section 161 – Despite Time Limit Being Over?

Section 161 of CGST Act permits rectification of any error apparent on the face of the record.

Let’s analyze:

• The failure to adjust already-paid tax (for same liability, already accepted by department in enforcement proceedings) is a mistake apparent from record.
• Natural justice violation (no opportunity of being heard) is a strong ground to invalidate the order.
• However, Section 161 allows rectification within 3 months from the date of order, unless the mistake is purely clerical/arithmetic or apparent from record.

👉 Case Law Support:

• Courts have held that rectification under Section 161 can be made even beyond 3 months, in the interest of justice, especially where there’s no fresh fact-finding required and the mistake is evident from the face of record.

✅ Conclusion on 161:

Yes, non-adjustment of already-paid liability is an apparent mistake if:

• There’s no dispute on tax having already been paid.
• Enforcement and Audit are taxing the same transaction/event.

Though time period under Section 161 has lapsed, judicial precedents and principles of fairness support rectification even beyond prescribed time, where grave injustice or double taxation would otherwise occur.

📝 Recommendation:

1. Reply to SPL-03 SCN:
   • Clearly highlight the double taxation and payment via GSTR-3B.
   • Enclose proof of payment, enforcement communication, and audit order.
2. Request Rectification u/s 161:
   • File a detailed representation/application, citing:
     • Mistake apparent from record.
     • Principles of natural justice.
     • Double taxation for same issue.
     • Past CBIC circulars / clarifications supporting adjustment of tax already paid.
3. Legal Support:
   • Rely on SCN without opportunity of being heard as a violation of Section 75(4) of CGST Act.
   • Quote case laws (can be shared on request) allowing rectification even beyond the 3-month window where justice demands.

Suggested Draft reply format for SPL-03 and a template for rectification request under Section 161 tailored to this case (You can modify it as per your requirement or get it approved from your GST Consultant/ Corporate Legal/Law Department/ Advisor).

Below are two suggested drafts for your case:

📄 1. Reply Format to SPL-03 Show Cause Notice

To be filed in response to SPL-03 issued in connection with the withdrawal of appeal under Section 128A and filing of SPL-02.

[On the Letterhead of the Taxpayer / Authorized Representative]

To

The Proper Officer,

[Jurisdictional GST Officer’s Designation & Office Address]

GSTIN: [Your GSTIN]

Subject: Reply to Show Cause Notice in SPL-03 – Regarding Rejection of SPL-02 Application – Reg.

Ref:

• GSTIN: [xxxx]
• SPL-02 Application Dated: [DD/MM/YYYY]
• SPL-03 Notice Dated: [DD/MM/YYYY]
• Adjudication Order u/s 73 dated: [DD/MM/YYYY]

Respected Sir/Madam,

With reference to the above-mentioned Show Cause Notice in Form SPL-03, the following is submitted for your kind consideration:

1. Background of the Case:
   • Enforcement Wing had earlier taken up the issue related to [brief issue – e.g., non-payment of tax on XYZ supply] for which the taxpayer had accepted the liability and discharged the same voluntarily via GSTR-3B of [Month/Year].
   • Subsequently, the Audit Officer issued an Order u/s 73, demanding tax on the same issue, without granting an opportunity of personal hearing, which is in violation of Section 75(4) of the CGST Act, 2017.
   • The assessee, to avail the benefit of reduced penalty under Section 128A, withdrew the appeal and submitted Form SPL-02.
2. Issue in the SPL-03 Notice:
   • The rejection appears to be based on a perceived duplication of tax liability.
   • However, the liability was already discharged in the next financial year via GSTR-3B, prior to the adjudication order, and should have been adjusted by the adjudicating authority, as per established principles and CBIC circulars.
3. Submissions:
   • The tax liability has already been discharged voluntarily for the said period, and hence, the same liability cannot be demanded again in the audit order.
   • The non-consideration of such payment in the adjudication order is a mistake apparent from the record, and hence should be rectified under Section 161 of the CGST Act.
   • The rejection of SPL-02 on this ground is not justified and defeats the intent of Section 128A and voluntary compliance.
4. Prayer:
   • Kindly consider this reply as sufficient cause and accept the SPL-02 application under Section 128A.
   • Alternatively, the department may initiate rectification under Section 161 to correct the apparent mistake and eliminate duplicate tax demand.

Thanking you,

Yours faithfully,

[Authorized Signatory Name]

Designation:

Date:

Encl.:

• Copy of GSTR-3B showing payment
• Enforcement correspondence (if available)
• Copy of Order u/s 73
• Proof of Appeal withdrawal
• Form SPL-02 filed

📄 2. Template: Application for Rectification under Section 161 of CGST Act

To

The Jurisdictional Proper Officer,

[Office of CGST / SGST]

[Zone / Division / Range Details]

GSTIN: [Taxpayer GSTIN]

Subject: Application for Rectification of Mistake Apparent from Record under Section 161 of CGST Act – In respect of Order No. [xxxx] dated [dd/mm/yyyy]

Respected Sir/Madam,

I, [Name of Applicant], proprietor/partner/director of M/s [Name of the business], holding GSTIN [GSTIN], wish to submit this request for rectification under Section 161 of the CGST Act, 2017 in respect of the adjudication order passed under Section 73, dated [dd/mm/yyyy], on the following grounds:

1. Background:

• The said order demands tax liability on [brief description of issue].
• However, the same issue was already addressed by the Enforcement Wing, and the tax liability was voluntarily paid via GSTR-3B for the month of [Month/Year], much before the passing of this order.

2. Nature of the Mistake:

• The order fails to acknowledge and adjust the already paid tax, resulting in duplicate taxation on the same issue, which is a mistake apparent from the record.
• As per established law and departmental circulars, any liability already discharged through GSTR-3B must be adjusted in further proceedings.

3. Legal Basis:

• Section 161 allows rectification of any mistake apparent from record, which includes mathematical, clerical or obvious errors not requiring fresh investigation.
• The mistake here is purely one of non-adjustment of already accepted and paid liability, clearly visible from:
  • Enforcement communication (if any)
  • Payment in GSTR-3B
  • Order under S.73 showing the same issue

4. Request:

In view of the above, it is humbly requested that:

• The order dated [dd/mm/yyyy] be rectified u/s 161, and
• The already paid amount via GSTR-3B be considered and adjusted,
• Thereby reducing the tax demand and related interest/penalty accordingly.

I undertake to submit any further documentation or clarification as required by your office.

Thanking you,

Yours sincerely,

[Name]

[Designation]

[Mobile / Email]

[Date]

Enclosures:

1. Copy of Order u/s 73
2. Copy of GSTR-3B showing payment
3. Appeal withdrawal proof (if applicable)
4. Copy of SPL-02 and SPL-03
5. Enforcement communication (if any)
6. Any other supporting document

Disclaimer: This discussion is not an Legal Opinion.

[Ramanathan Seshan]

Dear sir,

1. Adjustment of Liability Under Section 161:Section 161 generally pertains to rectification of mistakes, but its applicability depends on the nature of the mistake. If the failure to adjust the liability is due to an error or oversight, and it is apparent on the record, then a rectification under Section 161 may be possible. However, if the issue is not an apparent mistake but rather a matter of legal interpretation or judgment, it may not qualify for rectification.
2. Beyond Time Period: Typically, rectifications under Section 161 must be made within a specific time frame. If the issue is beyond the statutory time period, it may become difficult to rectify, unless there is clear evidence of an apparent mistake that could justify the correction even outside the prescribed period.
3. Apparent Mistake: If the failure to adjust the liability is clearly a clerical or factual error, it could be considered an "apparent mistake" and might be rectifiable. For example, if the department failed to process the liability adjustment despite being aware of it, this could be seen as a mistake that is apparent from the record and might warrant correction.

In conclusion, whether the adjustment of liability can be rectified under Section 161 despite being beyond the time period depends on the specific facts and whether it constitutes an "apparent mistake." If the issue is not an apparent mistake, rectification may not be possible under Section 161.

Regards,

S Ram

[Sadanand Bulbule]

Normally rectification of mistake under Section 161 is rarely considered by the authorities for many reasons. Secondly the time frame fixed for filing of application for rectification of mistake is three months from the date of communication of order/ decision. There is no condonation provision under Section 161 despite the merits of double payment of tax and the like that. Authorities are not given royal powers to do anything beyond the fixed time frame. It is only the High Court may consider it.

Theory sounds good, but reality is mirage.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir, High Court and Supreme Court both can consider.

"Theory sounds good, but reality is mirage."

The above quote cannot be rebutted. 

[YAGAY andSUN]

You're absolutely right in your assessment of Section 161 of the Central Goods and Services Tax (CGST) Act, 2017, which deals with rectification of errors apparent on the face of the record. While the provision seems straightforward in text, its practical implementation has been limited and constrained by both procedural rigidity and narrow interpretation by tax authorities.

Let’s break this down for better clarity:

Understanding Section 161 of CGST Act

Provision Overview:

Section 161 allows any authority who has passed or issued any decision, order, notice, certificate or document to rectify any error apparent on the face of the record. The key points are:

• The rectification can be suo moto (by the authority itself) or on an application by the taxpayer.
• The application must be made within 3 months from the date of communication of the said decision or order.
• The authority has 6 months from the date of issue of the original order to rectify the error.
• Rectification must not adversely affect the person unless the opportunity of being heard is given.

Challenges in Practical Use of Section 161

1. Strict Time Limitation with No Condonation Clause

• One of the biggest challenges is the absence of a condonation provision.
• Even in cases where genuine mistakes like double payment of tax, or clerical errors with financial implications are involved, authorities cannot entertain rectification applications after three months.
• This rigid framework limits authorities' powers—even in compelling or merit-based situations.

2. Rarely Exercised by Authorities

• In practice, tax authorities are hesitant to invoke Section 161, especially when it comes to self-initiated rectifications.
• This reluctance often stems from the fear of audit objections or judicial scrutiny and the lack of clear internal guidelines on what constitutes an "error apparent on the face of the record".

3. Narrow Interpretation of "Error Apparent"

• The term “error apparent on the face of the record” is interpreted very narrowly.
• It excludes debatable issues or any matter requiring elaborate argument or investigation.
• This often discourages the rectification of even obvious computational or procedural mistakes, unless they are blatantly visible without interpretation.

Remedy Through High Courts

Given the limitations, the only real option left for an assessee (taxpayer) beyond the 3-month limit—or where the authority refuses to consider a rectification—is to approach the High Court under Article 226 of the Constitution of India.

Judicial Precedents:

• Courts have, in many cases, entertained writ petitions when the taxpayer suffered due to a glaring mistake that could not be rectified under Section 161 due to time lapse or administrative inaction.
• However, approaching the High Court involves time, cost, and legal resources, which may not be feasible for all taxpayers.

Why Reform is Needed

• The absence of a condonation clause makes the section unfit for practical resolution of many genuine errors.
• There is a growing consensus that amendments are needed to:
  • Provide limited discretion to authorities for condonation in deserving cases.
  • Clarify what constitutes an "error apparent".
  • Lay down guidelines for suo moto rectification by authorities.

Conclusion

While Section 161 is a theoretically empowering tool, its practical application is severely curtailed by:

• Rigid timelines,
• Lack of discretionary powers, and
• Over-cautious approach by authorities.

Until legislative reforms are brought in, writ petitions before High Courts remain the only effective recourse for taxpayers caught in situations where a genuine mistake remains unaddressed due to procedural bottlenecks.

***

[YAGAY andSUN]

You may also seek option to file a Writ Petition pertaining to this matter: 

📄 1. Draft Writ Petition Format Under Article 226 (Rectification – Sec 161 CGST)

To be filed before the Jurisdictional High Court

IN THE HIGH COURT OF [STATE] AT [LOCATION]

[CIVIL WRIT JURISDICTION]

Writ Petition No. ______ of 2025

In the matter of:

Petitioner	[Name of the Petitioner]
Address	[Full Address]

VERSUS

Respondents

1. [Name/Designation of Jurisdictional GST Officer],
   Office of the [GST Department/Commissionerate Name],
   [Full Address]
2. Union of India,
   Through Secretary, Ministry of Finance,
   Department of Revenue, North Block, New Delhi – 110001

WRIT PETITION UNDER Article 226 OF THE CONSTITUTION OF INDIA SEEKING DIRECTIONS FOR RECTIFICATION OF MISTAKE UNDER SECTION 161 OF THE CGST Act, 2017 DESPITE LAPSE OF THE STATUTORY PERIOD IN INTEREST OF JUSTICE AND NATURAL JUSTICE

MOST RESPECTFULLY SHOWETH:

1. That the Petitioner is engaged in the business of [Nature of Business] and is duly registered under the Goods and Services Tax Act, 2017 bearing GSTIN: [XXXXXXXXXXXXXX].
2. That the Petitioner had inadvertently [mention the error — e.g., made a double payment of tax, filed incorrect figures, etc.] in [mention return/order/communication].
3. That upon detection of the mistake, the Petitioner made a request for rectification under SECTION 161 of the CGST Act, 2017 vide application dated [dd/mm/yyyy].
4. That the said provision allows rectification of “errors apparent on the face of record”; however, it mandates the application be filed within three months of communication of the decision/order.
5. That the said application was unfortunately filed after the three-month statutory period owing to [briefly explain the reason – e.g., oversight, ongoing correspondence, lack of response from department].
6. That despite the genuine and undisputed nature of the error, the Respondent Authorities declined to entertain the application for rectification citing time limitation and lack of condonation powers under SECTION 161.
7. That the denial of rectification solely on procedural grounds violates the principles of natural justice, especially where the error is patent, non-debatable, and leads to financial hardship.
8. That there exists no efficacious alternative remedy except to invoke the extraordinary jurisdiction of this Hon’ble Court under Article 226 of the Constitution of India.

PRAYER

In view of the above, the Petitioner most respectfully prays that this Hon’ble Court may be pleased to:

a) Issue a writ of mandamus or any other appropriate writ, direction or order directing the Respondents to consider and allow the rectification application filed by the Petitioner under SECTION 161 of the CGST Act, 2017 notwithstanding the time limitation;

b) Declare that the Respondents' refusal to entertain the rectification violates Article 14 and principles of natural justice;

c) Pass any other order(s) as this Hon’ble Court may deem fit in the interest of justice and equity.

AND FOR THIS ACT OF KINDNESS THE PETITIONER, AS IN DUTY BOUND, SHALL EVER PRAY.

Place:

Date:

Through Counsel:

[Name & Advocate Roll No.]

[Address]

[Phone/Email]

[YAGAY andSUN]

You may also explore following option in connection with aforesaid matter: 

📨 2. Sample Representation Letter to GST Department for Rectification (Post-3 Months)

To

The Jurisdictional GST Officer

[Designation/Office]

[Full Address]

[Email ID if available]

Subject: Request for Rectification of Mistake under Section 161 of CGST Act, 2017 – [GSTIN]

Respected Sir/Madam,

I, [Name], Proprietor/Director/Authorized Signatory of [Business Name], GSTIN: [XXXXXXXXXXXXXX], wish to bring to your kind attention the following:

1. That an inadvertent error occurred in the [mention document – e.g., GSTR-3B for month XX or Order dated XX] wherein [briefly describe the mistake — e.g., tax was paid twice on same supply].
2. That this is a clear and patent error, apparent on the face of record, falling squarely within the scope of Section 161 of the CGST Act, 2017.
3. That unfortunately, due to [mention reason — e.g., unawareness, delay in departmental communication], the application for rectification is being submitted beyond the prescribed 3-month window.
4. It is humbly submitted that no provision for condonation of delay exists under Section 161, but such absence should not preclude the department from recognizing and correcting genuine mistakes that lead to unjust enrichment of the revenue or hardship to the taxpayer.
5. In similar cases, High Courts have acknowledged the limitations of Section 161 and have directed consideration of rectification where merited.

You are kindly requested to:

• Examine the enclosed documents supporting this bona fide error, and
• Recommend/initiate appropriate remedial action,
• Or refer the matter to appropriate higher authority for suitable directions.

Enclosed:

• Copy of order/return in question
• Application for rectification
• Screenshots/Payment proofs (if any)
• Any other supporting documentation

We trust your office will take a sympathetic and fair view in this matter.

Thanking you,

Yours faithfully,

[Name]

[Designation]

[Mobile No.]

[Email]

[Company Seal, if any]

Date: [dd/mm/yyyy]

 

[Sadanand Bulbule]

While Section 161 does not place any restriction, other than the strict limitation of time, for filing an application for rectification of apparent mistake, it orbits around three crucial factors: WHEN, WHO and WHY.

[UmeshBabu J]

Thanks for informed response sir, 

Further the officers are not considering the directions in Circular No Circular No. 248/05/2025-GST, Whether it is discretionary ?

[JSW CEMENTLIMITED]

Sir, did you find any solution to this issue.

We also facing similar issue where payment was made by GSTR-3B, however officer unable to issue SPL-05 closing liability. 

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

 Sir, Out of three words, the word  'who' is most crucial and determinant factor. The word, 'who' includes all those as defined under Section 2 (84) of CGST Act. Out of (a) to (n), (k) is very  important for Section 161. 

[KASTURI SETHI]

In continuation,  practically the person (k) is the beneficiary of Section 161 of CGST Act.

[JSW CEMENTLIMITED]

Any resolution to this query. We are also encountring similar issue. Payment made through GSTR-3B, now the officer are not able to close the liability and issue SPL-05.

[UmeshBabu J]

The officers decided to reject the amnesty application. The officers advised us to file an appeal against the rejection of amnesty application. Presently appeal against SPL-07 is enabled in portal. Informally they accept their power of rectification but are unwilling to process it.

[UmeshBabu J]

Refer . The CBIC’s FAQ Circular (238/32/2024-GST, Oct. 15, 2024) and CBIC Instruction No.02/2025-GST (Feb. 7, 2025)

[JSW CEMENTLIMITED]

We have received order under section 73 of CGST. The demand for the said order has been paid by two method - part by GSTR-3B and part through Credit ledger. Against the said demand we had filed amnesty in SPL-02, relying on Circular No. 248/05/2025 dated 27.03.2025 where payment through GSTR-3B is considered as valid payment. However, the officer issued SPL-03 (SCN) rejecting the application, stating that payment made through GSTR-3B is outstanding it is not auto-reflecting in the portal. We submitted reply explaining the issue and reply on the Circular which itself acknowledges that payment made through GSTR-3B is a valid payment. However, it appears that GST portal has not created field for the officers to close the demand, where payment is made through GSTR-3B. Currently, the officer is unable to issue SPL-05, as it is not able to close the demand. Also, they are saying rectification is not possible, since the amensty already applied against the order so order is not reflecting for rectification.

 Has anyone practically encountered the issue and what is the solution. Please guide 

AI Summary

GST Section 73 audit demand issued despite prior liability payment through GSTR-3B creating portal adjustment problems A taxpayer received an adjudication order under Section 73 demanding tax from an audit officer, despite enforcement having previously raised the same issue and accepted liability payment through GSTR-3B in the next financial year. The audit officer failed to provide an opportunity for hearing before passing the order. The assessee filed an appeal, then withdrew it to apply for amnesty under Section 128A via Form SPL-02, but received a show cause notice in Form SPL-03 rejecting the application. The central issue involves whether liability adjustment not performed by the department can be rectified under Section 161 beyond the time period as an apparent mistake. Multiple parties report similar problems where payments made through GSTR-3B are not auto-reflecting in the portal, preventing officers from closing demands and issuing SPL-05 orders. Officers acknowledge their rectification powers but are unwilling to process such corrections, advising appeals against amnesty rejections instead. The GST portal lacks proper fields for officers to close demands where payments were made through GSTR-3B.