IMPORTANT POINT
Taxpayers should not be penalized for genuine errors, and proper officers must consider all relevant records when addressing rectification applications.

JUDGMENT

Petitioner – a partnership firm, challenges an order of determination under Section 73(9) of the Central Goods and Services Tax Act, 2017 and State Goods and Services Tax Act, 2017 (for short, 'the CGST/ SGST Act'). Petitioner also challenges an order dismissing an application for rectification.

2. For the financial year 2018-19, petitioner was alleged to have availed excess input tax credit. A show cause notice was issued on 28.12.2023, calling upon the petitioner to explain why the excess ITC, wrongly availed to the tune of Rs. 3,51,00,063/-, should not be recovered under section 73(1) of the CGST Act. A reply was filed, stating that, immediately upon noticing the wrong availing of ITC, petitioner had reversed it along with interest and an intimation as DRC-03 had also been filed on 30-01-2020. According to the petitioner, as soon as the error came to its knowledge, it had rectified it. However, by an order dated20.04.2024, the proper officer rejected the objections and imposed a total liability of Rs.6,88,64,182/- inclusive of tax, interest and penalty.

3. In the aforesaid order, it was observed that, DRC-03 alleged to have been filed by the petitioner, cannot be accepted, as, on verification, it was realized that the said intimation related to the period 2019-20, though the taxpayer had stated that it was a mistake for the period 2018-19. It was further observed that the claim could not be accepted as neither the proper officer nor the taxable person had given any information or report regarding such payment made by the taxable person to the corresponding period.

4. Aggrieved by the refusal of the authorities to accept the payment already made by the petitioner to reverse the wrongly availed ITC, petitioner filed a rectification application under Section 161 of the CGST/SGST Act, once again pointing out that DRC-03 filed on 30.01.2020 after making a payment of Rs.3,50,38,644/- could only correspond to the GST credit availed in excess for the year 2018-19 and that the impugned order was passed without considering the said payment as having been appropriated for the said financial year. It was also pointed out that due to a typographical error, the year was shown as 2019-20 in DRC-03 instead of 2018-19. However, since there was no rejection of the intimation, petitioner could not identify the mistake. According to the petitioner, it is only logical to assume that the huge deposit was made for the year 2018-19, especially since there was no pending liability for the year 2019-20. Petitioner contended that the mistake in DRC-03 application referring to the period as 2019-20, was specifically clarified as only an error, but the authority ignored the said contention and by the impugned order dated 29.11.2024, the rectification petition was dismissed. Petitioner is aggrieved by the impugned order of determination under Section 73(9) of the CGST Act as well as the order dismissing its application for rectification.

5. I have heard Sri K. S. Hariharan, the learned counsel for the petitioner, and Smt. M. M. Jasmin, the learned Government Pleader.

6. While verifying the monthly returns for the year 2018-19, the proper officer noticed certain discrepancies with respect to the ITC availed by the petitioner. On verification of the monthly returns and the statement of outward supply furnished by the suppliers, it was noticed that petitioner had availed ineligible ITC for the period 2018-19. Immediately upon realizing the incorrect availing of ITC, petitioner voluntarily paid the entire tax due from it and intimated the same by submitting DRC-03 on 30.01.2020, as required under Rule 142(2) of the CGST Rules, 2017. However, in the intimation filed as DRC-03, the financial year was, by mistake, mentioned as 2019-20, instead of 2018-19.

7. There is no dispute that petitioner had, through DRC-03, intimated the payment of a huge amount of Rs.3,50,94,614/- by utilisation from cash and credit. However, if the said intimation did not relate t