The Kerala High Court dismissed the petition as the assessee failed to respond to a Show Cause Notice (SCN) issued under section 73(1) of the Central Goods and Service Tax (CGST) Act on the excess claim of Input Tax Credit (ITC) under CGST.
Sakkeena C, the appellant is the proprietrix of M/s Royal International Exports and Imports, Ponnani. She is an assessee under the CGST/ State Goods and Service Tax (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 order and directed the appellant to remit an excess input tax credit of `2,74,570/- with interest of `2,63,590/- and a penalty of `27,460/-. The appellant, thereafter, submitted a rectification application under section 161 of the GST Act alleging that she mistakenly claimed an excess input tax credit of `1,37,285/- for SGST, the same amount for CGST and that the excess claim was rectified in April 2018, which is reflected in GSTR 3B.
The 1st respondent, however, rejected the application for rectification as per order. The appellant challenged the order before the Single Judge. As per the impugned judgment, the Single Judge dismissed the writ petition with liberty to the appellant to challenge orders in appeal before the appellate authority.
The counsel for the appellant submitted that non-consideration of return amounts to rectifiable error under section 161 of the GST Act and hence, the Single Judge ought to have interfered with the order and directed the matter to be reconsidered.
The appellant admitted 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.
Since the appellant failed to respond, the respondent finalised the assessment as per the available records. The division bench comprising of Dr Justice A K Jayasankaran Nambiar & Dr Justice Kauser Edappagath held that 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.
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. The Court dismissed the appeal.
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