Facts of the Case

The petitioners, Opasil Pigments And Chemicals (P) Ltd. and M/s Shyam Enterprises (decided by common order), had earlier succeeded before the Appellate Authority, which by order dated 8.2.2020 allowed their appeals and quashed penalties imposed under Section 129(3) of the UP GST/CGST Act, 2017 following seizure of goods. However, the department, upon filing a Special Leave Petition (SLP No.21569 of 2019) before the Supreme Court against an earlier related order, got the favourable appellate order recalled through an application under Section 161 of the GST Act — the rectification provision — rather than through any statutory appeal against the order itself. The petitioners challenged this recall order dated 4.8.2020 as an impermissible review disguised as rectification.

Issues Involved

  1. Whether an application under Section 161 of the CGST Act can be used to recall/review an appellate order decided on merits.
  2. Whether mere pendency of a Special Leave Petition before the Supreme Court, without any stay, justifies recalling a statutory appellate order.

Petitioner's Arguments

  • Section 161 permits correction only of an error apparent on the face of the record — one that strikes at a mere glance, without requiring any long-drawn process of reasoning — and cannot be used to review or substitute an order decided on merits.
  • Relying on the Supreme Court's ruling in Deva Metal Powders Pvt. Ltd. v. Commissioner of Trade Tax, the petitioners argued that recalling the entire appellate order was a substitution of the order, impermissible under the rectification power.
  • The pendency of an SLP, without any interim stay, could not by itself be a ground to recall a validly passed appellate order.

Respondent's Arguments

  • The department supported the recall order on the sole ground that since a Special Leave Petition had been preferred before the Supreme Court, the recall was rightly passed pending that outcome.

Court Order / Findings

  • The Court found that the appellate order dated 8.2.2020, allowing the appeal on merits under Section 107, had been recalled solely because the department had filed an SLP in which neither any interim order was granted nor any stay of proceedings imposed.
  • Applying Deva Metal Powders, the Court held that rectification under Section 161 cannot be used to obliterate an order and substitute it with a new one, and since the recall required more than a mere glance at the record, it fell outside the scope of Section 161 and amounted to an impermissible review of a validly passed appellate order.
  • The rectification/recall orders in both writ petitions were quashed, and the original order allowing the appeal was restored; the Court noted the department, if aggrieved, ought to have pursued the legal remedy available under the Act rather than filing a rectification application.

Important Clarification

  • Section 161 of the CGST Act is confined to correcting an error apparent on the face of the record — self-evident, requiring no elaborate reasoning — and cannot be invoked to review, recall or substitute an order decided on merits, even by the department against its own earlier concession.
  • Mere pendency of an SLP before the Supreme Court, absent any interim stay, does not authorise recalling a statutory appellate order through the rectification mechanism; the proper course is to pursue the available appellate/revisional remedy.

Sections Involved

  • Section 161, CGST Act, 2017 – rectification of errors apparent on the face of the record.
  • Section 129(3), CGST Act, 2017 – penalty for detention/seizure of goods/conveyance in transit.
  • Section 107, CGST Act, 2017 – first appellate remedy under which the original relief was granted.

Decision – In Favour of

In favour of the assessee — the Section 161 recall orders were quashed and the original appellate relief allowing the appeal and quashing the Section 129(3) penalty was restored.

Case Details

High Court of Judicature at Allahabad; WRIT TAX No. 613 of 2020 with WRIT TAX No. 604 of 2020; Coram: Hon'ble Piyush Agrawal, J.; Date: 04.09.2025.

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