Whether to File an Appeal or Wait for Rectification: Analyzing Timelines and Legal Precedents under DGST Act
By: Admin
April 20, 2024
Categories: GST Law|Our Articles
4 Min Read
Query raised:
The matter pertains to DGST
The Order had an error apparent on the face of it and the rectification application was made under Section 161 of the CGST Act, 2017, but the Assessing Officer did not specify a timeframe for the rectification and is currently on leave, with the deadline for filing an appeal set to expire on April 20, 2024.
Should the assessee proceed with filing the appeal despite waiting for the rectification, or should I wait for the Assessing Officer to issue the rectification order?
Answer to query:
Section 161 of the CGST Act 2017 deals with the rectification of mistakes or errors apparent from the record. It provides that the authority who has issued any decision, order, summons, notice, or certificate may rectify any mistake apparent from the record in such documents.
Such rectification by such authority can be done:
(a) Suo-moto by such authority
(b) On bringing to notice of such authority by GST official (Centre and State both)
(c) On bringing to notice by the affected person.
Rectification of errors under Section 161 of the CGST Act is an alternate legal remedy available to the aggrieved taxable person to correct an order or decision, etc, apart from an appeal under Section 107 of the CGST Act.
In light of the above, Instruction bearing F. No. 3(543)/GST/POLICY/2024/1312-18 dated March 1, 2024 (“the Instruction”) is relevant for the query at hand.
The instruction issued by the Delhi State GST Department regarding the rectification of assessment orders was to correct the errors apparent on the face of record under Section 161 of the DGST Act, 2017.
As per the aforesaid instruction read with Instruction bearing F. No. 3(543)/GST/POLICY/2024/1355-60 dated March 21, 2024 issued by the Delhi State GST Department, the following type of cases may be considered by the Department for the purpose of the rectification:
Where the amount of demand in question has already been fully deposited/ reversed vide DRC-03 and adequately informed to the proper officer in the reply filed by the registered person/ dealer, but the same has not been taken into consideration at the time of issuance of the demand order.
Where there is arithmetical error, i.e. calculation error/ head error, i.e. IGST, CGST and DGST in the demand order issued by the proper officer.
Cases where either the Annexure to the Show Cause Notices was not attached or Annexure pertaining to some other taxpayer has been attached therewith and the taxpayer had furnished the reply which was not considered before passing the order.
It is pertinent to mention here that as per sub-para (V) of para 4 of the Instruction, the rectification may not be done in the case where the Appeal is filed.
Also, in this regard, reliance has to be placed upon the judgment of the Hon’ble Karnataka High Court in the case of N.M.D.C. v. Authority for Advance Ruling [Writ Petition No. 1393 of 2021 dated February 26, 2021], wherein the Hon’ble High Court rejected the contentions of the Appellant the period of limitation would start from the date of the re-assessment/rectification order and held that, the doctrine of merger would not be applicable under GST and the Department is not empowered to condone the delay beyond the prescribed period. Relevant Para of the judgment is reproduced below :
- Learned counsel has also placed reliance on the judgement delivered in the case of Rashtriya Ispat Nigam Ltd. (supra). In the said case, the Court has held that the rectification sought was in respect of the same subject matter which was considered in the original assessment order, and hence, the doctrine of merger was applicable. The limitation, therefore, would start to run from the date of re-assessment order. The Court has held “Having regard thereto, in our opinion, the present case, arising from the notice under section 154 of Act, is covered by the judgment of the Supreme Court in Hind Wire Industries Ltd. (supra) and so also the other judgments referred to in the foregoing paragraphs, in particular Kundan Lal Srikishan and H.R.Sri Ramulu (supra) and in view thereof we hold that the doctrine of merger would apply to the facts of the present case. The limitation, therefore, would start to run from the date of re-assessment order dated 19-3-2010 and since the notice under section 154 was issued on 31-8-2012, it was well within the time stipulated under sub-section (7) of section 154 of the Act”.
- This court has carefully gone through the aforesaid judgment. However, again it was the case under the Income-tax Act. No outer limit in respect of limitation was provided under the statute as provided under the CGST Act. There cannot be condonation of delay beyond the period of 60 days. Keeping in view the facts and circumstances of the case as doctrine of merger is not at all applicable. Hence, the judgment relied upon is again is of no help to the petitioner.
- The cases relied upon by the learned counsel for the petitioner relate to those cases where the issue of doctrine of merger was involved and the cases relate to Income-tax Act or Central Excise Act, 1944. The provisions under both the Acts are not identical to the provisions dealing with limitation under the CGST Act, 2017. The provisions under the CGST Act, 2017 provides that the delay cannot be condoned beyond the period of 60 days. The Hon’ble Supreme Court in the case of Oil and Natural Gas Corpn. Ltd. v. Gujarat Energy Transmission Corpn. Ltd. [2017] 5 SCC 42 has held in paragraph-15 as under:
“15. From the aforesaid decisions, it is clear as crystal that the Constitution Bench in Supreme Court Bar Association (supra) has ruled that there is no conflict of opinion in Antulay’s case or in Union Carbide Corporation’s case with the principle set down in Prem Chand Garg & another v. Excise Commr. Be it noted, when there is a statutory command by the legislation as regards limitation and there is the postulate that delay can be condoned for a further period not exceeding sixty days, needless to say, it is based on certain underlined, fundamental, general issues of public policy as has been held in Union Carbide Corporation’s case. As the pronouncement in Chhattisgarh SEB lays down quite clearly that the policy behind the Act emphasizing on the constitution of a special adjudicatory forum, is meant to expeditiously decide the grievances of a person who may be aggrieved by an order of the adjudicatory officer or by an appropriate Commission. The Act is a special legislation within the meaning of Section 29(2) of the Limitation Act and, therefore, the prescription with regard to the limitation has to be the binding effect and the same has to be followed regard being had to its mandatory nature. To put it in a different way, the prescription of limitation in a case of present nature, when the statute commands that this Court may condone the further delay not beyond 60 days, it would come within the ambit and sweep of the provisions and policy of legislation. It is equivalent to Section 3 of the Limitation Act. Therefore, it is uncondonable and it cannot be condoned taking recourse to Article 142 of the Constitution.”
- In the light of the aforesaid judgment, the AAR was justified in rejecting the appeal on the ground of limitation as it was not having power to condone the delay beyond 30 days. Therefore, this Court also does not find reason to condone the delay keeping in view the statutory provisions.
- The law of limitation is found upon maxims such as “Interest Reipublicae Ut Sit Finis Litium” which means that litigation must come to an end in the interest of society as a whole, and “vigilantibus non dormientibus Jura subveniunt” which means that the law assists those that are vigilant with their rights, and not those that sleep thereupon. The law of limitation in India identifies the need for limiting litigation by striking a balance between the interests of the state and the litigant. 17. In the aforesaid case, the statute provided for condonation of delay which is not beyond 60 days. The Hon’ble Supreme Court has held that the delay cannot be condoned beyond 60 days and therefore, in the light of the aforesaid judgment, question of condoning the delay beyond 30 days does not arise.
(Emphasis Supplied)
Opinion:
Therefore, placing reliance upon the aforesaid judgement and the Instructions, it is opined that the date of filing of appeal for the purpose of limitation would be the date from which the order has been communicated to the person aggrieved and not the date of the rectification order.
The rectification order under Section 161 of the CGST Act, 2017, is intended to correct only the errors apparent on the face of the original order without altering its merits, discussions, or findings in substantive terms. Consequently, the original appeal timeline remains applicable. However, there are scenarios where the taxpayer might be dissatisfied with the rectification, potentially wanting to appeal it. If the rectification order is issued beyond the original appeal deadline, typically six months, it poses an ambiguity. This situation suggests a potential need for clarification in the legislation to address this nuanced interpretative challenge.
Therefore, it would be advisable to file the appeal in the present case and not wait for the passing of the rectification order, as the CGST Act doesn’t specify a timeframe for the assessing officer’s response. Further, as per the language used in the Instruction, the officer has discretionary power to rectify the order even when an appeal is filled by the assessee.