Sakkeena.C. vs. The State Tax Officer

Facts

The petitioner, Sakkeena C., proprietor of M/s. Royal International Exports & Imports, filed a writ petition challenging an order dated 29.09.2023 passed by the State Tax Officer (1st respondent) on a rectification application. An earlier assessment order (Exhibit P-1) had determined that the petitioner claimed excess input tax credit (ITC) of Rs. 2,74,570 (Rs. 1,37,285 for CGST and Rs. 1,37,285 for SGST). Consequently, the petitioner was directed to pay tax, interest, and penalty totaling Rs. 5,65,620. The petitioner then filed a rectification application (Exhibit P-4), stating that the excess ITC claim was a mistake and had been rectified in April 2018, reflected in GSTR 3B. The petitioner sought correction of the assessment order based on this rectification.

Held

The Court held that the writ petition lacked merit and was dismissed. The Court agreed with the view taken by the assessing authority in the impugned order (Exhibit P-5). The reasoning was that there is a fundamental difference between rectification and review. The assessing authority does not possess the power to review its own assessment order. The petitioner's rectification application, in essence, sought a review of the finalized assessment order based on a subsequent event (rectification in GSTR 3B). The Court found that the assessing authority's refusal to alter the finalized assessment order on this basis was not incorrect. The ratio decidendi is that a finalized assessment order cannot be revisited or altered by the assessing authority through a rectification application if such alteration amounts to a review of the original order. The petitioner was granted liberty to file an appeal against both the assessment order (Exhibit P-1) and the rectification order (Exhibit P-5) before the appellate authority, with a direction for expeditious consideration if an appeal is filed.

Key Issues

1. Whether the assessing authority has the power to review its finalized assessment order based on a subsequent rectification application, considering the distinction between rectification and review. The petitioner contended that the excess ITC claim was a genuine mistake that was rectified in the GSTR 3B for April 2018, and therefore, the assessment order should be corrected. The petitioner implicitly argued that the assessment order, being based on a mistaken claim, was amenable to correction through the rectification process. The revenue, through the 1st respondent's impugned order, contended that the assessment order was finalized and passed based on the records available at that time. The assessing authority argued that it lacked the power to review its assessment order based on subsequent events or claims made in a rectification application, differentiating it from the power of rectification. The revenue relied on the principle that a finalized assessment order cannot be reopened under the guise of rectification if it amounts to a review.