Telangana High Court directs rectification route in GST royalty RCM dispute

Madineni Srinivas Vs State of Telangana (Telangana High Court)

In a concise yet important ruling, the Telangana High Court addressed a procedural lapse in GST adjudication involving royalty payments under the Reverse Charge Mechanism (RCM). Instead of delving into the merits, the Court emphasized the availability of statutory rectification under Section 161 of the CGST/TGST Act, reinforcing a practical compliance pathway for taxpayers.

Case Background

• The petitioner, Madineni Srinivas, challenged an order passed under Section 74 of the CGST/TGST Act, 2017.
• The dispute related to GST liability on royalty payments under RCM for FY 2020-21, 2021-22, and 2022-23.
• The petitioner argued that:
  • GST had already been fully paid on such royalty.
  • Supporting documents, including a sub-license agreement dated 20.10.2019, were submitted during adjudication.
• However, the Assessing Officer failed to consider these փաստs while passing the order (Form GST DRC-07 dated 06.10.2025).

Key Legal Issue

Whether a writ petition is maintainable when the grievance arises from an apparent omission by the adjudicating authority, and a statutory remedy of rectification under Section 161 is available.

Arguments Presented

Petitioner

• The demand order suffers from a clear factual error—non-consideration of already paid GST.
• This constitutes an error apparent on record.
• Requested either:

1. Remand of the matter, or

2. Liberty to seek rectification under Section 161.

Respondent (Department)

• If it is indeed an inadvertent omission, the law provides a remedy under Section 161.
• The petitioner should approach the proper officer for rectification, especially since the limitation period is still available.

Court Observations

• The Court noted that:
  • The grievance primarily relates to non-consideration of material already on record.
  • Such issues can be addressed through rectification proceedings.
• It accepted the submission of the Government Pleader that Section 161 provides an adequate remedy.
• The Court consciously avoided examining the merits of the tax dispute.

Final Judgment

• The writ petition was disposed of without adjudicating on merits.
• The petitioner was granted:
  • Liberty to file a rectification application before the proper officer under Section 161.
• The Court directed that:
  • If filed within the prescribed time,
  • The officer shall consider and decide the application in accordance with law within a reasonable time.
• No order as to costs.

Author’s Analysis (Practical Takeaways)

1. Rectification vs Writ – Choose wisely
Courts are increasingly discouraging writ petitions where statutory remedies like Section 161 exist.

2. Error apparent = Strong ground
Non-consideration of submitted documents is a classic case of “error apparent on record”, fit for rectification.

3. Documentation is critical
The petitioner’s ability to show:

• • Payment proof
  • Agreements
    played a key role in securing relief.

4. Section 161 is underutilized
Many taxpayers overlook this provision, but it is a powerful and time-efficient remedy for correcting orders.

5. Timelines matter
Rectification must be sought within statutory time limits, failing which the remedy is lost.

6. Court’s minimal interference approach
The High Court reaffirmed that it will not step in when alternate remedies are adequate and effective.

Conclusion

This ruling is a practical reminder that not every GST dispute requires constitutional intervention. Where the issue stems from an apparent oversight, Section 161 provides a direct and efficient correction mechanism. Taxpayers should evaluate such remedies carefully before approaching High Courts, ensuring both procedural discipline and strategic litigation.

FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT

Learned counsel Sri M.Uma Shankar appears for the petitioner. Sri Swaroop Oorilla, learned Special Government Pleader for State Tax, appears for the respondents.

2. The petitioner contends that the sub-license agreement dated 20.10.2019 and other documents produced by the petitioner and the records of M/s. DRN Infrastructure Pvt. Ltd., the sub-licensee, submitted during adjudication would show that the Goods and Services Tax (GST) on royalty under reverse charge mechanism for the financial years 2020-2021, 2021-2022 and 2022-2023 have been duly paid. The assessing officer while passing the order-in-original under Section 74 of the Central Goods and Services Tax Act, 2017/Telangana Goods and Services Tax Act, 2017 (hereinafter referred to as, “the Act”) and the summary of the order in Form GST DRC-07 dated 06.10.2025 has failed to take note of this fact regarding payment of the entire GST amount over royalty under reverse charge mechanism which is the only error or omission on the part of the adjudicating officer. He prays that either the matter may be remanded or liberty may be granted to the petitioner to seek rectification under Section 161 of the Act.

3. Learned Special Government Pleader for State Tax submits that if it is a case of inadvertent omission, the proper officer can exercise his powers of rectification under Section 161 of the Act. Therefore, the petitioner may be directed to approach the proper officer, as it is still within time from the date of the order.

4. Learned counsel for the petitioner submits that the matter may be disposed of in those lines.

5. In that view of the matter, the writ petition is disposed of without getting into the merits of the claim of the parties, with liberty to the petitioner to approach the proper officer with a rectification application in relation to the aforesaid grievances. Needless to say, if such an application is made within the prescribed time, the proper officer would examine it in accordance with law and take a decision thereupon within a reasonable time. There shall be no order as to costs.

Miscellaneous applications pending, if any, shall stand closed.