RECTIFICATION OF MISTAKE UNDER GST LAW

[Dr. Sanjiv Agarwal]

Rectification of errors apparent on the face of record (Section 161)

Section 161 of the CGST Act, 2017 deals with rectification of mistake or errors apparent from record. It provides that the authority who has issued any decision, order, summon, notice or any certificate may rectify any mistake apparent from 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.

Meaning of Error Apparent on the Face of Record

No definition has been provided in the GST law for the term error apparent on the face of record. Error means mistake, fault, inaccuracy, incorrect belief etc. It is settled legal position that errors of law and errors of law, both can be rectified. Generally, it is seen that there are three types of errors such as errors of law, errors of facts and clerical, arithmetical errors. Errors which are patent, obvious, visible and evident from the face of record can be considered to be errors apparent on the face of record and may be covered under section 161 of the Act. Errors which involved debatable, arguable points, involving interpretation, long and elaborate arguments and required additional evidences cannot covered scope of apparent errors. Failure to consider documents by proper officer submitted by taxpayer / person while passing order or decision is error of fact and apparent on the face of record. Similarly, failure to consider provision of law is an error of law and amounts to error apparent on the face of record.

The phrase ‘mistake apparent from record’ has not been defined under the GST Act. It means an obvious mistake. There are detailed provisions provided for this concept under section 154 of Income Tax Act, 1961. The term ‘mistake’ in legal perspective can be understood to mean the following:

(a)   Misreading a clear provision is a mistake,

(b)  Application of a wrong provision of Act,

(c)   Applying an inapplicable provision,

(d)  Overlooking a mandatory provision, and

(e)   Non-following of decision of jurisdictional High Court

The term ‘record’ can be understood to mean record of the case comprising the whole proceedings including documents and materials produced by the parties and taken on record by the authorities, which were available at the time of passing of order which is the subject matter of rectification proceeding.

Time Limit to for Application for Rectification

Both, taxable person and officers appointed under the GST law may request to the authority for initiation of rectification proceeding. Taxable person is required to file application for rectification within three month from the date of issue of such order or decision or notice or certificate. However, no such time limit has been prescribed to Officers for sending report to concerned authority, for initiation of rectification proceeding, on the ground of error apparent on the face of record. Similarly, no such time limit is also applicable to the authority for initiation of proceeding on its own motion. Therefore, if error is apparent on the face of record and person desire to rectify it, then it is necessary to file an application within a period of three months from date of issue of such order etc.

It may be noted that a time limit of three months is allowed for the affected person to bring to attention any such error or mistake. This time limit does not apply to a CGST/SGST officer from bringing it to the attention to the issuing authority or for making voluntarily rectification. However, no such rectification is permitted after 6 months from the date of its issuance.

Time Limit for Rectification Order

It is provided in the section itself that rectification order should be passed within six months from the date of such order or decision or notice or certificate or any other documents. However, said time limit of six months is not applicable where rectification is purely in the nature of correction of clerical or arithmetical error, arising from any accidental slip or omission. In such cases, authority may issue notice and rectify error on his own motion on or on the basis of report of any officer appointed under the act within two years.

Principle of Natural Justice to be observed

If authority is of opinion that there is error in the order, or decision or notice or certificate or other documents and rectification of same may adversely affect any person, then said authority should follow principle of natural justice and should give opportunity of hearing on the proposed errors to such person. If no opportunity of hearing is given, then such order may not be sustainable in the appeal. However, if rectification of error does not lead to adverse affect to the person, then there may be no need to give an opportunity of hearing before passing such order under section 161 of CGST Act, 2017.

Any rectification done as per provisions of section 161 of the GST Act can be done within maximum period of six months from the date of issue of such document.

Scope of rectification under section 161 is very wide as it includes decisions, notice, certificate and other documents issued. Rectification of errors under section 161 of the act is alternate legal remedy available to the aggrieved taxable person to correct order or decision etc apart from an appeal under section 107 of the act. Generally, in respect of errors other apparent on the face of record involved in the order, aggrieved person may file appeal against said order and raise all grounds in appeal. However, where errors in the order which are apparent on the face of record are found, then aggrieved person may apply for rectification as per section 161 of CGST Act, 2017. In case an application is rejected on the ground that error is not apparent on the face of record or if the person is not satisfied with the rectification order issued by the authority, then an appeal can be filed against such order to the appellate authorities which is infact an additional alternate remedy to the aggrieved person. Similarly, it provides an additional corrective remedy, in addition to review and appeal, available to the authorities to remove error and correct the impugned order.

No Rectification to be done which changes Order Substantially

While correcting any mistake under section 161, no rectification can be made in the substantive portion of the document. In the garb of correcting the mistake, the competent authority cannot change his opinion in respect of the matter already decided by him.

Applicable Rules and Forms

Applicable Rule [Rule 142(7)]

Where a rectification of the order has been passed in accordance with the provisions of section 161 or where an order uploaded on the system has been withdrawn, a summary of the rectification order or of the withdrawal order shall be uploaded electronically by the proper officer in FORM GST DRC-08.

This rule requires a summary of the rectification order passed under section 151 to be uploaded electronically by the Proper Officer in Form GST DRC-08. The same form is used for withdrawal of order. It contains details of original order and rectification order and details of original demand and demand after rectification.

Applicable Form

Form GST DRC-08 is required to be issued under section 142(7) as a summary of rectification order. This form was substituted vide Notification No. 16/2019 –CT dated 29.03.2019 w.e.f. 01.04.2019.

Discussions to this article

[Senguttuvan Kuppusamy]

Dear Sir
Amazing work at apt timing; there are huge pressure to the authorities in passing orders. As a result of this pressure, the authorities are passing orders in hurry with many mistakes

Have a query: you have said that if such rectification will change the order substantially, then the authority cannot do the rectification. Request you to clarify this

[Dr. Sanjiv Agarwal]

What is meant is rectification can be made only of an error which is apparent on record and not otherwise. The rectification cannot result into review of the impugned order in the garb of correcting mistake. In any case , the assessee has to be given opportunity of being heard following the principles of natural justice.