GST Rectification application Must Be Disposed Within 6 Months: Madras HC

GST Rectification application filed to be mandatorily disposed within six months of issuance of order or notice or any other document under Section 161: Madras High Court

The Madras High Court, in the case of Manu Blue Metals and M. Sand v. State Tax Officer, addressed the mandatory time frame for disposing of rectification applications filed under Section 161 of the CGST Act. The Petitioner, Manu Blue Metals and M. Sand, filed a rectification application against an assessment order concerning alleged non-payment of tax on seigniorage fees under the Reverse Charge Mechanism (RCM) and short payment of tax on outward supply. The Petitioner argued that the tax authority had failed to dispose of the rectification application within the six-month period prescribed by Section 161. While the section itself stipulates that no rectification should be done after six months from the date of the original order (except for clerical errors), the Court acknowledged the Petitioner’s submission regarding the department’s delay. Consequently, the High Court directed the State Tax Officer to mandatorily dispose of the rectification application filed by the Petitioner within a period of three months from the date of the Court’s order. This directive enforces the timely processing of such applications, ensuring that taxpayers receive a final determination on errors apparent on the face of the record without undue delay.

Facts:

Mani Blue Metals and M. Sand (“the Petitioner”) issued an assessment order dated August 30, 2023 was issued relating to alleged non-payment of tax due of seigniorage fees under RCM and alleged short payment of tax on outward supply.

The Petitioner thereafter filed a rectification application under Section 161 of the CGST Act. However, the Petitioner contends that the rectification application has not been disposed within the prescribed time limit of six months.

Issue:

Whether rectification application filed is to be mandatorily disposed within six months of issuance of order or notice or any other document?

Held:

The Hon’ble Madras High Court in the case of W.P. No. 16407 of 2024 took into consideration the submission made by the Petitioner and directed the Department to dispose the rectification application filed within a period of three month from the date of receipt of hon’ble high court order passed in the aforesaid case.

Our Comments:

As per Section 161 of the CGST Act, the affected person has to bring the error apparent within a period of three months from the date of issuance of such order or notice or certificate or any other document, however, no such rectification shall be done after a period of six months from the date of issuance of aforesaid documents. However, the said period of six months shall not apply in such cases where the rectification is purely in the nature of correction of a clerical or arithmetical error, arising from any accidental slip or omission:

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(Author can be reached at info@a2ztaxcorp.com)