Statutory Appeal vs. Writ: Condonation of Delay for Period Spent in Rectification

Facts

The Dispute: The Petitioner challenged an Order-in-Original and a summary demand in Form GST DRC-07 for the period July 2017 to March 2018.
The Cause: The demand originated from a DRC-01A notice based on an Input Tax Credit (ITC) mismatch between GSTR-3B and GSTR-2A/2B. This occurred because suppliers had subsequently amended their FY 2017-18 entries on the GST portal.
Procedural History:
- The Proper Officer issued an SCN and confirmed the tax, interest, and penalty.
- The Petitioner filed a Rectification Application under Section 161 against the Order-in-Original, asserting that their explanation regarding the amended invoices was not considered.
- The Rectification Application remained pending for approximately two years before being rejected.
The Challenge: Since the time limit for a statutory appeal had expired while waiting for the rectification order, the Petitioner filed a Writ Petition seeking relief.

Decision

Final Verdict: Partly in favour of the Assessee (Relegated to Appellate Authority).
Ratio Decidendi:
- Exhaustion of Remedies: The Court held that when a statutory appeal mechanism exists under Section 107, the High Court will generally not entertain a Writ Petition on merits.
- Exclusion of Time: The Court recognized the “genuine hardship” caused by the long pendency of the rectification application. It ruled that the Appellate Authority must consider the delay by taking into account the period spent pursuing the rectification and the time spent in the instant writ proceedings.
- Merit-Based Adjudication: The Court directed that if the delay is condoned based on these factors, the appeal must be decided on its merits, ensuring the taxpayer is not left without a remedy due to procedural timelines.

Key Takeaways

Strategic Choice (Appeal vs. Rectification): This case serves as a warning. While Section 161 allows for rectification of “errors apparent on the face of the record,” filing for rectification does not automatically stay the limitation period for filing a regular appeal under Section 107.
Protective Appeals: As a best practice, if a rectification application is filed, practitioners should consider filing a “protective appeal” simultaneously or ensure they approach the Appellate Authority immediately if the rectification is not resolved within the 3-month appeal window.
Condonation Argument: This ruling is a vital precedent for condonation of delay. It establishes that the time spent in alternative statutory proceedings (like Section 161) is a valid ground for seeking condonation under the “sufficient cause” provision.
ITC Mismatch Defense: For FY 2017-18, where suppliers amended invoices later, this case affirms that such technical mismatches are a matter of merit that should be adjudicated at the appellate level rather than being dismissed on purely technical or procedural grounds.

HIGH COURT OF TELANGANA

Udeva Preci Steel Products Mft. Co.

Superintendent of Central Tax and Central Excise^*

APARESH KUMAR SINGH, CJ.
and G.M.MOHIUDDIN, J.

WRIT PETITION No. 9193 of 2026

APRIL 1, 2026

Singam Srinivasa Rao, learned counsel for the Petitioner. Dominic Fernandes, learned Senior Standing Counsel for the Respondent.

ORDER

1. Heard Sri Singam Srinivasa Rao, learned counsel for the petitioner and Mr. Dominic Fernandes, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs (CBIC) appears for respondent Nos. 1 and 2.

2. Petitioner has laid challenge to the order-in-original dated 08.12.2023 and summery of the order in Form GST DRC-07 dated 28.12.2023 on the ground that it was passed without considering his reply dated 19.08.2023 and without verifying the records, in violation of principles of natural justice and the procedure prescribed under the Central Goods and Services Tax Act, 2017 (for short, “the CGST Act”). Petitioner immediately thereafter filed a rectification application on 07.02.2024, which has also been rejected by order dated 28.01.2026 also impugned in the writ petition.

3. According to the petitioner, the adjudication proceedings relates to the period from July, 2017 to March, 2018 where due to lack of clarity some suppliers had issued invoices and filed returns using GSTIN 32ZA resulting in mismatch between the GSTR-3B and GSTR-2A/2B. The supplier made certain amendments in the GST portal in GSTIN applied for 2017-18. However, the respondent issued Form GST DRC-01A proposing demand of Rs.15,37,411= “74” alleging excess ITC for 2017-18. Despite submission of a reply and explaining the mismatch due to the dual GSTIN issue and suppliers errors requiring verification of amended invoices, the proper officer conducted the adjudication proceedings and passed the order-in-original holding him liable to pay tax, interest and penalty. It is further submitted that the proper officer has not applied his mind and made the necessary corrections even on a rectification application made as would appear from a perusal of the order dated 28.01.2026 specially paras 9 to 13. Therefore, the petitioner has assailed both the proceedings.

4. Learned counsel for the petitioner has also relied upon a decision of the Allahabad High Court in Prakash Medical Stores v. Union of India (Allahabad). Writ Tax No.5865 of 2025, dt: 12.12.2025, wherein the period spent in pursuing the rectification application has been excluded by relying upon Section 14 of the Limitation Act, 1963 for the purposes of preferring an appeal. Learned counsel for the petitioner has therefore sought to assail the impugned orders on merits as well.

5. Learned Senior Standing Counsel for CBIC submits that the reply referred to by the petitioner is to Form GST DRC-01A, the intimation prior to issuance of show cause notice. He has however not submitted any reply to the show cause notice which led the proper officer to pass the impugned order-in-original. However, he does not dispute that since the rectification application was pending all along for about two years, the benefit of Section 14 would enure the petitioner to prefer an appeal to the impugned order-in-original.

6. Having regard to the facts and circumstances noted above and that the petitioner seeks to assail the findings of the proper officer on merits as well, we are of the view that the petitioner may approach the appellate authority taking all such grounds of law and fact. If such an appeal is preferred with statutory predeposit and delay condonation application, the appellate authority would consider the question of delay taking into account the period spent during pendency of the rectification application and also the period spent in pursuing the writ remedy before this Court. If the appellate authority is satisfied with the explanation for delay, he shall proceed to decide the appeal on merits in accordance with law. Let it be made clear that we have not made any comments on the merits of the case.

7. Accordingly, the writ petition is disposed of. There shall be no order as to costs.

Miscellaneous applications, if any pending, shall stand closed.