Facts of the Case

The petitioner, Polyguards Equipment & Tools Private Ltd., Kizhakkambalam, Kerala, represented by its Managing Director Mr. Baby OJ, challenged Exhibit P-5 order of the Deputy Commissioner, State Goods and Services Tax Department, Special Circle (Produce), Mattanchery, Ernakulam, dated 16 February 2022, which assessed the petitioner for short payment of Rs.52,249 in GST for assessment year 2017-18, with interest and penalty aggregating a total demand of Rs.1,11,651. The petitioner claimed it became aware of Exhibit P-5 only upon receiving Exhibit P-6, a revenue recovery notice dated 10 August 2023 issued by the Deputy Commissioner of State Tax (Arrear Recovery). The petitioner filed this writ petition under the Goods and Services Tax Act, 2017 instead of first pursuing the statutory appellate remedy.

Issues Involved

  1. Whether the High Court, exercising writ jurisdiction, could sit in appeal over an assessment order passed under the GST Act, 2017.
  2. Whether the alleged short payment of GST was genuine, given the petitioner's claim of no discrepancy between GSTR-3B and GSTR-1.
  3. Whether the petitioner could be permitted to file a rectification application under Section 161 of the GST Act despite expiry of the ordinary six-month limitation.

Petitioner's Arguments

  • The difference in tax payment reflected in Exhibit P-5 arose from an initial technical error, which has since been cured; a comparison of GSTR-3B and GSTR-1 shows no actual difference justifying the short-payment finding.
  • The petitioner was unaware of Exhibit P-5 until it received the revenue recovery notice, Exhibit P-6, dated 10 August 2023, and therefore had no earlier opportunity to challenge or rectify the order.
  • In the alternative, the petitioner sought permission to file a rectification application under Section 161 of the GST Act, given that GSTR-3B and GSTR-1, on comparison, showed no discrepancy warranting the demand of Rs.52,249.

Respondent's Arguments

  • The Government Pleader submitted that Exhibit P-5 was dated 16 February 2022, and the limitation for filing a rectification application under Section 161 is only six months from the date of the order, which had long expired.
  • However, it was fairly conceded that there is no limitation period for rectifying arithmetical or clerical mistakes, leaving room for the petitioner to seek correction of any such error even at this stage.

Court Order/Findings

  • The Court held it is not an appellate authority over assessment orders passed under the GST Act, 2017, and was therefore not inclined to interfere with Exhibits P-5 and P-6 in writ jurisdiction; the petitioner ought to have pursued the statutory remedy under the Act.
  • Considering the Government Pleader's submission that there is no limitation for correcting arithmetical or clerical mistakes, the Court permitted the petitioner to file a rectification application within fifteen days.
  • If filed within that period, the rectification application is to be considered in accordance with law, and the order impugned in Exhibit P-5 may be revised accordingly.
  • The writ petition was disposed of with these directions; no order quashing Exhibits P-5 or P-6 was passed.

Important Clarification

  • The High Court will not act as an appellate forum for GST assessment orders; a writ petition is not a substitute for the statutory appeal.
  • The six-month limitation under Section 161 for rectification applications does not apply to arithmetical or clerical mistakes, which can be raised for correction even beyond that period.
  • A taxpayer alleging that an assessment is based on a reconciliation error between GSTR-3B and GSTR-1 should first pursue rectification under Section 161 before, or instead of, invoking writ jurisdiction.

Sections Involved

  • Section 161, Central/Kerala Goods and Services Tax Act, 2017 — rectification of errors apparent on the face of the record, ordinarily subject to a six-month limitation, except for arithmetical or clerical mistakes.
  • Goods and Services Tax Act, 2017 — governs assessment, GSTR-1 and GSTR-3B return filing, and recovery of short-paid tax.

Decision – In Favour of

Disposed of with directions, in part in favour of the Assessee. The Court declined to quash the assessment or recovery notice on merits but permitted the petitioner to pursue rectification under Section 161 despite the ordinary limitation having expired, on the footing that arithmetical/clerical corrections are not time-barred.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Kerala at Ernakulam
  • Case No.: WP(C) No. 28241 of 2023
  • CNR: Not available on record
  • Coram: Justice Dinesh Kumar Singh
  • Decision Date: October 4, 2023
  • Disposal Nature: Disposed of — petitioner permitted to file rectification application under Section 161

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