In a significant case, the Kerala High Court stated that rectification order is not sustainable if it does not provide any reason justifying the exercise of power of rectification. It was observed that the personal hearing notice does not indicate that any reason justifying the exercise of power of rectification was pointed out to the assessee.
Krishna Agencies, the petitioner has approached the Court being aggrieved by order rectifying certain alleged mistakes in order issued under Sections 73/74 of the Central Goods and Service Tax ( CGST/SGST ) Acts for the year 2017-2018. The petitioner has challenged on a short ground. It was submitted that the competent authority proceeded to rectify order without informing the petitioner as to the reason that prompted the exercise of the power of rectification.
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The Counsel for the department referred to the statement filed by the department and attempted to justify the rectification order based on the provisions of Section 161 of the Central Goods and Services Tax/State Goods and Services Tax Acts, 2017.
The bench noted that the original order, dated 26.12.2023, was communicated to the assessee on 29.12.2023. Subsequently, on 06.03.2024, a notice for a personal hearing was issued to the assessee.
The single bench of Justice Gopinath P. observed that the personal hearing notice does not indicate that any reason justifying the exercise of power of rectification was pointed out to the assessee. Therefore, the assessee is right in contending that the rectification order cannot be sustained in law.
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Section 161 of the Central Goods and Services Tax ( CGST ) Act, 2017, authorises a Proper Officer to rectify such errors. These errors typically include clerical mistakes, arithmetical errors, omissions, or other inadvertent mistakes that do not require extensive interpretation or investigation.
In view of the above, the bench quashed both the notice and the rectification order. Aji V. Dev, H. Abdul Lathief and Alan Priyadarshi Dev appeared for the petitioner. The respondent was represented by P.R. Sreejith.
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