Overview of GST Section 161 for Rectification of Errors

What is GST Section 161?

Section 161 of the CGST Act, 2017 states the rectification of mistakes or errors that are recognized from the records. It mentions that the authority responsible for issuing decisions, orders, summons, notices, or certificates may rectify any mistake that is found in the records in such documents.

These rectifications are done by the below-mentioned relevant authority:

• Suo moto by such authority.
• Upon notice by the affected person
• Upon notices of such authority by GST officials (both at the Central and State levels).

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What Does the Term Error Evident on the Face of Records Mean?

The GST legislation does not provide a specific definition for the term “error evident on the face of records.” An error means mistakes, faults, inaccuracies, or incorrect beliefs. It is legally established that both errors in law and errors in fact can be rectified. Typically, there are three categories of errors: errors in law, errors in fact, and clerical or arithmetic errors. Errors that are patent, obvious, readily visible, and discernible from the document itself can be considered errors that are evident on the face of records and dealt with under Section 161 of the Act.

Mistakes bearing questionable or arguable things in them – including clarifications, long and elaborate arguments, and needed supportive evidence cannot be categorized under the scope of apparent errors. Disregarding and not considering the documents by the proper officer submitted by the taxpayer/person during the issuance of the order or decision is considered as an error of fact and recognized on the face of the record. Correspondingly, not taking the regulation of law into account is mentioned as an error of law and recognized as an error apparent on the face of the record.

The term “mistake evident from records” remains undefined under the GST Act, indicating an unmistakable error. In this context, Section 154 of the Income Tax Act, of 1961, furnishes detailed provisions regarding the concept. The term “mistake,” from a legal perspective, includes the following scenarios:

• Misreading a clear provision is an error.
• Applying an inapplicable provision.
• Ignoring a mandatory provision.
• Application of an incorrect provision of the Act.
• Disregard of decisions by the jurisdictional High Court.

The word ‘record’ can be meant as a comprising of the whole situation, including entire proceedings such as documents and materials provided by the concerned parties and officially taken on record by the authorities. When the order was issued which is the subject matter of the rectification process, these records were available.

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Time Limit for Rectification of Errors Under GST Section 161

Both taxable individuals and officers designated in accordance with the GST law have the authority to ask for the commencement of rectification proceedings. A taxable individual must submit an application for rectification within three months from the date when the respective order, decision, notice, or certificate was issued.

However, officers are not subject to any specified time limit for reporting errors evident on the face of records to the relevant authority on the grounds for conducting rectification proceedings. Similarly, there is no set time limit for the authority itself to commence proceedings independently. Therefore, in case, an order is apparent on the face of records and a person is required to make corrections to it, he must file an application within three months from the date when the order was issued.

It may be observed that affected individuals are allowed a three-month period to bring any such errors or mistakes before the authorities. In certain cases, when informing the issuing authority or when willingly applying for rectification, this time limit is not applicable to CGST/SGST officers. However, it is not allowed to apply for the rectification after the period of six months has already surpassed the issuance date.

GST Section 161 Time Limit for Issuing Rectification Orders

A rectification order is required to be passed within the period of six months from the date of issuance of the respective order, decision, notice, certificate, or any other documents, in accordance with the Section itself. However, in the case where the rectification effect pertains only to rectifying clerical or arithmetic mistakes caused by unintentional slips or omissions, this six-month time limit is not applicable. In such cases, the authority may take action by issuing a notice and rectifying the error on their own initiative or based on a report from any officer appointed under the act, within a span of two years from the issuance of the original document.

Natural Justice Principles Should Depend on Authority

Authority should rely on the principles of natural justice if the authority finds out that there is an error in an order, decision, notice, certificate, or other documents, and correcting it might result in affecting any person. In this case, such a person should be provided with an opportunity to make his point about the proposed errors. Failing to provide an opportunity for a hearing may consider the order unsustainable in the appeal. However, there is no need to give an opportunity for a hearing prior to issuing such an order under Section 161 of the CGST Act, 2017, if rectifying the mistake doesn’t lead any person to face any consequences.

Rectification proceeded under Section 161 of the GST Act is required to be completed within the set time which is six months from the issuance date of the concerned order.

Section 161 has a wide scope, encompassing decisions, notices, certificates, and other documents issued. Rectifying errors under Section 161 of the act provides an alternative legal recourse for aggrieved taxable individuals to correct orders or decisions, aside from filing an appeal under Section 107 of the act. Typically, when errors other evident from the record found in an order, the affected person has the option to file an appeal challenging the order, where they can address all their concerns.

However, the affected person can seek rectification under Section 161 of the CGST Act, 2017, in cases where the errors in the order are apparent on the face of the record. If the application for rectification is denied due to the error not being readily apparent, or if the individual is unsatisfied with the rectification order issued by the authority, they can file an appeal against such an order before the appellate authorities which is an additional solution provided to the affected person. Likewise, this offers an additional alternative mentioned above to address the issue which supplements the existing options of review and appeal, which the authorities can use to rectify mistakes and also rectify the challenged order.

No Changes are Required When Rectifying Erros U/S 161

When rectifying any error under Section 161, no changes are required to be made to the major part of the document. In the pretext of rectification of the error, the competent authority is not allowed to its point of view regarding the issues that have already been decided by the authority.

Relevant GST Rules & Forms

Below we have discussed the applicable GST rules and forms under the CGST Section 161 for taxpayers:

Useful GST Rule 142(7)

In cases, where rectification of the directive has been issued under Section 161 or in cases, where an order uploaded on the portal has been taken back, then the proper officer must upload the abstract of the rectification order or the withdrawal order electronically in Form GST DRC-08.

As per the regulations, the Proper Officer must upload an abstract of the rectification order issued under Section 151 electronically in Form GST DRC-08. This same form can also be utilized for the withdrawal of the directive. This form includes information on the original order and rectification order and a summary of the original claim and demand post-rectification.

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Appropriate Form of GST DRC-08

As a summary of the rectification order, it is required to issue Form GST DRC-08 under Section 142(7). This form was a replacement via the GST Notification No. 16/2019-CT on 29.03.2019, which was in effect from 01.04.2019.