GST Statue permits correction of bonafide errors until notice u/s. 73 of CGST is issued

Lotus Pharmaceuticals Vs Assistant State Tax Officer (Kerala High Court)

Kerala High Court held that the statue permits taxpayer to correct bonafide errors by self-verification of assessment and payment of liability until the notice is issued under section 73 of the CGST. Accordingly, bonafide error in assessment and intimation in DRC-03 is directed to be allowed.

Facts- For F.Y. 2018-19, petitioner was alleged to have availed excess input tax credit. A show cause notice was issued on 28.12.2023, calling upon the petitioner to explain why the excess ITC, wrongly availed to the tune of Rs. 3,51,00,063/-, should not be recovered u/s. 73(1) of the CGST Act. A reply was filed, stating that, immediately upon noticing the wrong availing of ITC, petitioner had reversed it along with interest and an intimation as DRC-03 had also been filed on 30-01-2020. According to the petitioner, as soon as the error came to its knowledge, it had rectified it. However, by an order dated 20.04.2024, the proper officer rejected the objections and imposed a total liability of Rs.6,88,64,182/-.

Aggrieved by the refusal of the authorities to accept the payment already made by the petitioner to reverse the wrongly availed ITC, petitioner filed a rectification application u/s. 161 of the CGST/SGST Act, once again pointing out that DRC-03 filed on 30.01.2020 after making a payment of Rs.3,50,38,644/- could only correspond to the GST credit availed in excess for the year 2018-19 and that the impugned order was passed without considering the said payment as having been appropriated for the said financial year. Petitioner contended that the mistake in DRC-03 application referring to the period as 2019-20, was specifically clarified as only an error, but the authority ignored the said contention and by the impugned order dated 29.11.2024, the rectification petition was dismissed. Petitioner is aggrieved by the impugned order of determination u/d. 73(9) of the CGST Act as well as the order dismissing its application for rectification.