Whether recovery action can be taken without disposing of the rectification application of the Petitioner due to an inadvertent error made in Form GSTR-1?

No, the Honorable Madras High Court in the case of Veeran Mehhta v. Deputy Commercial Tax Officer and Deputy State Tax Officer [Writ Petition No. 15789 of 2024 dated June 25, 2024] directed the disposal of the Order dated January 22, 2024, which was based on a mismatch of tax liability discharged in form GSTR-3B and belatedly filed Form GSTR-1. The Honorable Court held that no recovery or coercive measures could be initiated until the Petitioner’s rectification petition was resolved. The Honorable Madras High Court noted that the Petitioner placed on record the Form GSTR-3B for January in the assessment period 2018-2019. The Form GSTR-1, purportedly for July in the assessment period 2019-2020 was also on record. The outward taxable value pertaining to IGST in the two documents was tallied. The Petitioner also placed on record the tax liability comparison report from the GST portal. This document also indicated an excess in liability when the Form GSTR-3B and Form GSTR-1 were compared. Such excess was Rs. 4,17,577/-. In these circumstances, a prima facie case was made out for consideration of the rectification petition.

The Honorable Court held that the writ petition is disposed of and the Respondent is restrained from initiating recovery or coercive measures until the rectification petition was disposed of and lastly, directed the Respondent to consider and dispose of the rectification application within three months from the date of the order.

Author’s Comments

Section 161 has a very limited scope and it allows for the rectification of any error or mistake that is apparent from the record. It is important to note that ‘apparent on the face of record’ is not one that involves (i) a conclusion that cannot be reached without taking new facts on record during rectification proceedings or (ii) requiring application of mind to existing facts or interpretation already adopted in reaching the conclusion already reached. In the Author’s considered opinion, this is not a fit case to apply for rectification.

The only remedy is to prefer an appeal before the first appellate authority against the impugned order. If an appeal is not filed within the statutory time limit (3+1 months), then this remedy is lost forever and recovery action will be just and proper. Alternatively, cause-of-action (GSTR-1 vs GSTR-3B) could have been disputed, where notice ought to have been issued as per Section 75(12) in form DRC-01B and not under Section 73. Where a specific section is given under the statute to address the issue of mismatch of data reported in GSTR-1 and GSTR-3B, resorting to Section 73 is a gross misapplication of the law

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