Tax Authorities Must Dispose of Rectification Applications Within Six Months: Madras HC
The Madras High Court ruled that a rectification application filed by a taxpayer under Section 161 of the CGST Act must be compulsorily disposed of by the tax authorities within the maximum period of six months from the date the original order, notice, or document was issued.
Key Points of the Judicial Ruling
- Mandatory Time Limit for Disposal: The court held that the six-month time limit prescribed under Section 161 for the authority to issue an order for rectification is mandatory. This means the authority is legally bound to dispose of the application, either by rectifying the error or refusing the rectification, within this period.
- Purpose of Rectification: Section 161 allows the authorities to rectify “any error which is apparent on the face of the record” in any decision, order, notice, or certificate. The court’s ruling ensures that taxpayers are not left in uncertainty due to delays in correcting such obvious mistakes.
- Taxpayer’s Right to Timely Resolution: The decision emphasizes that the statutory time limit is intended to provide certainty to the taxpayer. Failure by the authority to dispose of the rectification application within six months would render the application automatically accepted or the rectification granted (though the text of the article implies a duty to dispose, not automatic acceptance). The ruling compels the department to address clear errors promptly.