High Court Dismisses Appeal Challenging Excess Input Tax Credit Claim

Case Name:

SAKKEENA.C. v. State Tax Officer & Commissioner, State Goods & Services Tax Department

Key Takeaways:

1. Appellant claimed excess input tax credit under the CGST/SGST Acts, leading to assessment proceedings initiated by the State Tax Officer.
2. The appellant’s rectification application under section 161 of the GST Act was rejected, and the appeal challenging this rejection was dismissed by the High Court.
3. The High Court emphasized that rectification under section 161 of the GST Act is permissible only when there are errors apparent on the face of the record, in a situation where the show cause notice was contested, which was not the case here.
4. The judgment highlighted that the statutory appeal, if any, filed by the appellant against the assessment orders, shall be considered by the appellate authority independently on merits.

Case Synopsis:

The provided is a judgment from the High Court of Kerala at Ernakulam, dated 14th November 2023, regarding a writ appeal (WA No. 1969 of 2023) against the judgment WP(C) 35051/2023 of the High Court of Kerala. The appellant/petitioner in this case is SAKKEENA.C., aged 46 years, who is the proprietrix of M/S. Royal International Exports & Imports, located in Ponnani, Malappuram District, PIN - 679577. The respondents are the State Tax Officer, State Goods & Services Tax Department, Mini Civil Station, Tirur, Malappuram, and the Commissioner, State Goods & Services Tax Department, Tax Towers, Killippalam, Karamana, Thiruvananthapuram.

The judgment was delivered by Dr. Kauser Edappagath, J., and it states that the appeal was preferred to challenge the judgment of the learned Single Judge in WP(C) No. 35051/2023 dated 27th October 2023. The appellant, SAKKEENA.C., is an assessee under the CGST/SGST Acts on the rolls of the 1st respondent. The 1st respondent found that the appellant had claimed excess input tax credit for the financial year 2017-18, to the extent of 2,74,570/-. Consequently, the 1st respondent initiated proceedings under section 73(1) of the CGST Act. Despite statutory notices being issued to the appellant, she did not respond. The 1st respondent completed the assessment proceedings and directed the appellant to remit the excess input tax credit of 2,74,570/- with interest of 2,63,590/- and a penalty of 27,460/-.

The appellant then submitted a rectification application under section 161 of the GST Act, alleging that she mistakenly claimed excess input tax credit of `1,37,285/- for SGST and the same amount for CGST, and that the excess claim was rectified in April 2018, which is reflected in GSTR 3B, marked as Exhibit P3. However, the 1st respondent rejected the application for rectification as per Ext.P5 order. The appellant challenged Ext.P5 order before the learned Single Judge, who dismissed the writ petition with liberty to the appellant to challenge Exts.P1 and P5 orders in appeal before the appellate authority.

The judgment further states that the learned counsel for the appellant submitted that non-consideration of Ext.P3 return amounts to a rectifiable error under section 161 of the GST Act and hence, the learned Single Judge ought to have interfered with Ext.P5 and directed the matter to be reconsidered. However, the court did not subscribe to this submission, stating that the appellant made no case for rectification. The rectification under section 161 of the GST Act is permissible only when there are errors apparent on the face of the record, in a situation where the show cause notice was contested, which is not the case here. The court found no merit in the appeal and dismissed it, stating that the statutory appeal, if any, filed by the appellant against Exts. P1 and P5 orders shall be considered by the appellate authority independently on merits.

FAQ:

Q1: What was the appeal about?

A2: The appeal challenged the assessment proceedings initiated by the State Tax Officer regarding the appellant’s claim of excess input tax credit under the CGST/SGST Acts.

Q2: Why was the appellant’s rectification application rejected?

A2: The appellant’s rectification application under section 161 of the GST Act was rejected as the court found that the appellant made no case for rectification.

Q3: What did the High Court emphasize regarding rectification under section 161 of the GST Act?

A3: The High Court emphasized that rectification under section 161 of the GST Act is permissible only when there are errors apparent on the face of the record, in a situation where the show cause notice was contested, which was not the case in this instance.