Case Law Details
Sakkeena.C. Vs State Tax Officer (Kerala High Court)
Introduction: The Kerala High Court recently rendered a crucial judgment in the case of Sakkeena.C. Vs State Tax Officer, challenging the excess claim of Input Tax Credit (ITC) under the Central Goods and Services Tax (CGST) Act. The appellant, the proprietrix of M/s Royal International Exports and Imports, Ponnani, faced legal scrutiny over the claimed ITC for the financial year 2017-18.
Detailed Analysis: The appellant, upon verification of returns, was found to have claimed an excess ITC of `2,74,570/-. Initiated under section 73(1) of the CGST Act, the State Tax Officer issued statutory notices. Despite due communication, the appellant failed to respond, leading to the completion of assessment proceedings. The assessment order (Ext.P1) directed the appellant to remit the excess ITC with interest and penalty.
The appellant later submitted a rectification application under section 161 of the GST Act, asserting a mistaken claim for SGST and CGST, rectified in April 2018. However, the application was rejected by the 1st respondent (Ext.P5 order). The appellant contested this rejection before the learned Single Judge, who, in turn, dismissed the writ petition, allowing the appellant to appeal Exts.P1 and P5 orders before the appellate authority.
The appellant argued that the non-consideration of Ext.P3 return constituted a rectifiable error, necessitating interference by the learned Single Judge. The High Court, however, disagreed, emphasizing that the appellant had admitted to the excess claim. The court noted the appellant’s failure to respond to discrepancies and the show cause notice, deeming the assessment final.
The judgment underscored that rectification under section 161 of the GST Act is only permissible for errors apparent on the face of the record. In cases where show cause notices go uncontested, rectification cannot be sought to correct factual mistakes in the final order.
Conclusion: In conclusion, the Kerala High Court dismissed the appeal, finding no merit. The judgment emphasizes that the statutory appeal against Ext.P1 and P5 orders should be independently considered by the appellate authority on its merits. This case serves as a reminder of the importance of timely and substantive responses to statutory notices in GST matters, as non-response can lead to assessments becoming final and unalterable.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
This appeal has been preferred challenging the judgment of the learned Single Judge in WP(C) No.35051/2023 dated 27th October, 2023.
2. The appellant is the proprietrix of M/s Royal International Exports and Imports, Ponnani. She is an assessee under the CGST/SGST Acts on the rolls of the 1st respondent. On verification of the returns filed by the appellant for the financial year 2017-18, the 1st respondent found that the appellant had claimed excess input tax credit to the extent of `2,74,570/-. Hence, the 1st respondent initiated proceedings under section 73(1) of the CGST Act. Even though statutory notices were issued to the appellant, she did not respond. The 1st respondent completed the assessment proceedings by Ext.P1 order and directed the appellant to remit excess input tax credit of Rs.2,74,570/- with interest of Rs. 2,63,590/- and penalty of Rs.27,460/-. The appellant, thereafter, submitted a rectification application under section 161 of the GST Act alleging that she mistakenly claimed excess input tax credit of Rs.1,37,285/- for SGST, the same amount for CGST and that the excess claim was rectified in the month of April 2018, which is reflected in GSTR 3B, marked as Exhibit P3. The 1st respondent, however, rejected the application for rectification as per Ext.P5 order. The appellant challenged Ext.P5 order before the learned Single Judge. As per the impugned judgment, the learned Single Judge dismissed the writ petition with liberty to the appellant to challenge Exts.P1 and P5 orders in appeal before the appellate authority.
3. We have heard Sri. Harisankar V. Menon as well as Sri. V.K. Shamsudeen, the learned Senior Government Pleader.
4. The learned counsel for the appellant submitted that non-consideration of Ext.P3 return amounts to rectifiable error under section 161 of the GST Act and hence, the learned Single Judge ought to have interfered with Ext.P5 and directed the matter to be reconsidered. We cannot subscribe to the said submission. Ext.P1 assessment order has been issued pointing out the excess availment of input tax credit. The appellant admits that she made such an excess claim. Even though the discrepancies in the return filed by the appellant regarding the excess claim of the input tax credit were communicated to the appellant, she did not respond. The appellant also did not respond to the show cause notice issued by the 1st respondent under section 73(1) of the CGST Act, nor did she avail the opportunity given for a personal hearing. The 1st respondent, therefore, finalised the assessment as per the available records. What is sought by the appellant, in effect, is the review of the said assessment order. The appellant made no case for rectification. The rectification under section 161 of the GST Act is permissible only when there are errors apparent on the face of the record, in a situation where the show cause notice was contested, which is not the case here. When a show cause notice is not contested, the resultant order passed assumes the nature of an agreed order and a rectification application will not lie to correct a factual mistake therein.
We find no merit in the appeal. Accordingly, it is dismissed. The statutory appeal, if any, filed by the appellant against Exts. P1 and P5 orders shall be considered by the appellate authority independently on merits.
