Rectification Order Not Sustainable If It Fails To Provide Reasons Justifying Exercise Of Rectification Power: Kerala High Court
The Kerala High Court stated that rectification order is not sustainable if does not provide any reason justifying exercise of power of rectification. The Bench of Justice Gopinath P. observed that “….personal hearing notice does not indicate that any reason justifying the exercise of power of rectification was pointed out to the assessee. Therefore, the assessee is right...
The Kerala High Court stated that rectification order is not sustainable if does not provide any reason justifying exercise of power of rectification.
The Bench of Justice Gopinath P. observed that “….personal hearing notice does not indicate that any reason justifying the exercise of power of rectification was pointed out to the assessee. Therefore, the assessee is right in contending that the rectification order cannot be sustained in law.”
Section 161 of the Central Goods and Services Tax (CGST) Act, 2017, authorises a Proper Officer to rectify such errors. These errors typically include clerical mistakes, arithmetical errors, omissions, or other inadvertent mistakes that do not require extensive interpretation or investigation.
The assessee challenged the rectification order that addressed certain alleged mistakes in the original order issued under Sections 73/74 of the CGST/SGST Acts for the year 2017-2018.
The assessee submitted that the competent authority proceeded with the rectification without informing them of the reasons prompting the exercise of the rectification powers. Specific reference was made to the notice, which only called upon the assessee to appear for a personal hearing on 11.03.2024.
The Counsel for the department referred to the statement filed by the department and attempted to justify the rectification order based on the provisions of Section 161 of the Central Goods and Services Tax/State Goods and Services Tax Acts, 2017.
The bench noted that the original order, dated 26.12.2023, was communicated to the assessee on 29.12.2023. Subsequently, on 06.03.2024, a notice for a personal hearing was issued to the assessee.
The bench further observed that the personal hearing notice did not indicate any reasons justifying the exercise of the power of rectification to the assessee. Therefore, the rectification order cannot be sustained in law.
In view of the above, the bench quashed both the notice and the rectification order.
Counsel for Petitioner/ Assessee: Aji V. Dev, H. Abdul Lathief and Alan Priyadarshi Dev
Counsel for Respondent/ Department: P.R. Sreejith
Case Title: Krishna Agencies v. The Superintendent, Central Tax & Central Excise, Kayamkulam Range
Case Number: WP(C) NO. 23487 OF 2024
Citation: 2024 Live Law (Ker) 651