The Uttarakhand High Court has clarified that a special rectification scheme notified under Section 148 of the CGST Act operates independently of the stringent error-apparent-on-the-face-of-record standard under Section 161. This ruling provides critical relief to taxpayers who missed appeal deadlines but qualify under the government’s remedial initiative.
Background & Facts
The Dispute
The petitioner, Mahesh Kumar Goyal, was issued an order dated 07.11.2023 by the first respondent, Assistant Commissioner, SGST, demanding Rs. 1,26,773.59 for the period July 2017 to March 2018. The demand arose due to a mismatch in Input Tax Credit (ITC) availed by the petitioner during the said period. No appeal was filed against this order within the statutory period.
Key Facts
- The demand order was passed under Section 73 of the CGST Act, 2017 on 07.11.2023
- The petitioner did not file an appeal against the order within the prescribed 3-month period
- On 24.06.2025, the petitioner filed an application for rectification under a special scheme notified by the Central Board of Indirect Taxes and Customs (CBIC)
- The application was rejected on 04.07.2025 on the ground that no error apparent on the face of the record existed, as required under Section 161 of the CGST Act
- The rejection order specifically invoked Section 161, ignoring the existence of the special rectification scheme
Procedural History
- 07.11.2023: Demand order issued under Section 73 of CGST Act
- 08.10.2024: Notification No. 22/2024 issued under Section 148 of CGST Act, notifying a Special Rectification Drive
- 15.10.2024: CBIC issued clarifications confirming the scheme’s intent to allow rectification without requiring proof of error apparent on the face of record
- 24.06.2025: Petitioner filed rectification application under the special scheme
- 04.07.2025: Application rejected by the first respondent citing Section 161
- 09.04.2025: Writ Petition (M/B) No. 876 of 2025 filed before the Uttarakhand High Court
Relief Sought
The petitioner sought quashing of the order dated 04.07.2025 rejecting his rectification application, and a direction to the first respondent to reconsider the application under Notification No. 22/2024 dated 08.10.2024, without applying the Section 161 standard.
The Legal Issue
The central question was whether an application filed under the special rectification scheme notified under Section 148 of the CGST Act must be evaluated under the restrictive criteria of Section 161, which requires an error apparent on the face of the record, or whether the scheme operates as an independent, concessional remedy.
Arguments Presented
For the Petitioner
Dr. Govind Singh Latwal argued that the application was filed specifically under Notification No. 22/2024, which was issued under the enabling power of Section 148 of the CGST Act. He relied on the CBIC’s clarification dated 15.10.2024, which explicitly stated that the scheme was designed to allow rectification irrespective of whether an error was apparent on the face of the record, provided no appeal had been filed. He contended that the rejection on Section 161 grounds was legally unsustainable and defeated the very purpose of the scheme.
For the Respondent
Ms. Puja Banga, learned Brief Holder for the State, submitted that the application was correctly rejected under Section 161, as no error was discernible on the face of the demand order. She argued that the special scheme could not override statutory provisions and that the rejection was in accordance with the law.
The Court's Analysis
The Court examined the nature and intent of Notification No. 22/2024 and the accompanying CBIC clarification dated 15.10.2024. It observed that the scheme was not a mere procedural guideline but a substantive, time-bound remedial initiative issued under the broad powers conferred by Section 148, which permits the Commissioner to issue orders for rectification of errors in a manner prescribed by notification.
"As thereby a window has been provided to the defaulting assessees to seek rectification under the drive, therefore, the rejection of the application on the ground that it does not fall under Section 161 is manifestly illegal."
The Court held that Section 161 applies only to applications filed independently under that provision, and not to those filed under a special scheme notified under Section 148. The legislature’s intent, as reflected in the notification and clarifications, was to provide a lenient, accessible avenue for taxpayers who had not challenged the order through appeal. Applying Section 161’s stringent standard to such applications would nullify the scheme’s purpose.
The Court further noted that the rejection order failed to consider the CBIC’s official guidance, which was binding on the revenue authorities. The refusal to apply the scheme’s relaxed criteria amounted to a violation of legitimate expectation and procedural fairness.
The Verdict
The writ petition was allowed. The order dated 04.07.2025 rejecting the rectification application was set aside. The first respondent is directed to reconsider the petitioner’s application dated 24.06.2025 in accordance with Notification No. 22/2024 dated 08.10.2024 within six weeks from the date of communication of this order. The demand order dated 07.11.2023 shall remain suspended pending the re-adjudication.
What This Means For Similar Cases
Special Rectification Schemes Override Section 161
- Practitioners must now distinguish between applications filed under Section 161 and those filed under special schemes notified under Section 148
- Applications under such schemes cannot be rejected on grounds of "error apparent on the face of record"
- CBIC clarifications issued alongside notifications are binding on revenue authorities
Timing Is Critical for Eligibility
- Taxpayers who missed appeal deadlines may still qualify if they file under the scheme before its expiry
- The scheme applies only if no appeal was filed - this is the sole eligibility criterion
- Practitioners should proactively advise clients to file under such schemes before deadlines, even if the original order appears legally sound
Administrative Compliance Is Non-Negotiable
- Revenue authorities must apply the scheme’s terms as notified, not impose additional statutory conditions
- Rejection orders citing Section 161 for applications filed under Section 148 schemes are legally invalid
- Failure to follow notified procedures may result in writ jurisdiction being invoked
