Kerala HC sets aside conflicting KGST Orders as it cannot Co-Exist [Read Order]

Winter Wood Designers & Contractors India Pvt, the petitioner is a private limited company having registration under the provisions of the Central Goods and Service Tax, Act, 2017/Kerala State Goods and Service Tax Act, 2017. The grievance of the petitioner is against the order, by which the rectification sought by the petitioner, in respect of order, was rejected on the reason that that petitioner failed to submit the rectification application within the statutory period of six months as contemplated under Section 161 of the GST Act.

Earlier, highlighting certain discrepancies in the assessment pertaining to the financial year 2017-2018, a show cause notice dated 18.10.2021 was served upon the petitioner, to which a reply was submitted by the petitioner in time. The proceedings thereon were finalized under Sections 73 and 74 of the CGST Act, dropping the proceedings proposed, after accepting the explanation offered by the petitioner. However, simultaneously, yet another show cause notice was also issued by yet another officer, pointing out the very same discrepancies.

The said show cause notice resulted in order, wherein the explanation offered by the petitioner was rejected and the proceeding was finalized against the petitioner. By the order by which the proceedings were dropped is dated 08.12.2023 whereas, order, which is passed against the petitioner is dated 30.12.2023.

Immediately thereafter, the petitioner submitted before the 2nd respondent who passed order, highlighting this discrepancy, relating to the duplication of the order. The order was submitted on 01.02.2024 by way of an email. Thereafter as there was no response to revenue recovery notice, representations were submitted.

Ultimately, the 2nd respondent, passed an order on 27.01.2025, wherein, the 2nd respondent accepted the mistake of duplication but rejected the request placed by the petitioner, on the ground that, as the petitioner did not submit a rectification application by uploading through a GST Portal, within the statutory period of six months as contemplated under Section 161 of the GST Act, no interference could be made.

The main challenge is against rectification rejection order highlighting the duplication of the orders. There is no dispute that the points highlighted in the respective show cause notices which culminated in those orders were the same, but the conclusions were different. It is also evident that by which the proceedings were dropped accepting the explanation offered by the petitioner, was the first order.

Thus, it is a fact that, by the time an order was passed against the petitioner, the explanation offered by the petitioner was accepted and the proceedings dropped. Therefore the second order could not have been passed.

The reason for rejecting the request of the petitioner it was only because, the rectification application was not filed through the portal within the time limit and therefore, the rectification order in respect of Ext.P8 could not have been passed. However, the fact that the petitioner had intimated this aspect by way of email as early as on 01.02.2024 is admitted, which is within the statutory period contemplated under Section 161 of the GST Act.

As far as the invocation of the powers under Section 161 of the GST Act is concerned, it is not confined to a situation where, the aggrieved party approaches the authority with an application for rectification.

A single bench of Justice Ziyad Rahman A.A. observed that when an error is brought to the notice of the officer concerned or otherwise the officer becomes aware of such error which is apparent on the face of record, the officer concerned can suo motu initiate the proceeding of rectification as well.

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Since there is admittedly a duplication of the orders based on two proceedings initiated alleging the same irregularities, there was an error apparent on the face of the records as far as order is concerned. Therefore, it is a matter which ought to have been rectified as it results in two mutually conflicting orders passed on the same issue by the Officers of the same Department.

When such a serious error was clearly pointed out before the competent authority, within the statutory period contemplated under Section 161 for rectification, such authority could not have refrained from invoking the powers of rectification. In view of the fact that, receipt is admitted and also that the same is within the statutory time, non invocation of the powers of rectification under Section 161 by the 2nd respondent was not at all proper.

Therefore, the reason which formed the basis, by which the request of the petitioner was declined, cannot be said to be legally sustainable. In such circumstances, this writ petition is disposed of, quashing as the adjudication on the discrepancies highlighted in the show cause notices for the assessment year 2017-2018 stood concluded by way of order.

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