Procedure for rectification of order for ITC u/s 16(5) or 16(6)-CGST Notification dated 08.10.2024

To simplify the rectification process for registered taxpayers under the Goods and Services Tax (GST) regime, the Ministry of Finance has issued Notification No. 22/2024 – Central Tax. This new notification introduces a special procedure aimed at rectifying orders related to the wrong availment of the Input Tax Credit (ITC) under certain sections of the GST Act. The provisions are particularly relevant for taxpayers who had been issued a demand order under sections 73, 74, 107, or 108 of the Central GST Act, due to non-compliance with section 16(4), but where the ITC is now deemed available as per sections 16(5) or 16(6).

Notification No. 22/2024 - Central Tax dated 08th October 2024

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

Date: 08.10.2024

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Notification No. 22/2024 - Central Tax

S.O. 4373(E).- 1. In exercise of the powers conferred under  section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act), the Central Government, on the recommendations of the Council, hereby notifies the following special procedure for rectification of order, to be followed by the class of registered persons (hereinafter referred to as the said person), against whom any order under section 73 or section 74 or section 107 or section 108 of the said Act has been issued confirming demand for wrong availment of the input tax credit, on account of contravention of provisions of sub-section (4) of section 16 of the said Act, but where such input tax credit is now available as per the provisions of sub-section (5) or sub-section (6) of section 16 of the said Act, and where appeal against the said order has not been filed, namely:-

2. The said person shall file, electronically on the common portal, within a period of six months from the date of issuance of this notification, an application for rectification of an order issued under section 73 or section 74 or section 107 or section 108 of the said Act, as the case may be, confirming demand for wrong availment of input tax credit, on account of contravention of provisions of sub-section (4) of section 16 of the said Act, but where such input tax credit is now available as per the provisions of sub-section (5) or sub-section (6) of section 16 of the said Act, and where appeal against the said order has not been filed.

3. The said person shall, along with the said application, upload the information in the proforma in Annexure A of this notification.

4. The proper officer for carrying out rectification of the said order shall be the authority who had issued such order, and the said authority shall take a decision on the said application and issue the rectified order, as far as possible, within a period of three months from the date of the said application.

5. Where any rectification is required to be made in the order referred to in paragraph 1 and, the said authority has issued a rectified order thereof, then the said authority shall upload a summary of the rectified order electronically.

(i) In FORM GST DRC-08, in cases where rectification of an order issued under section 73 or section 74 of the said Act is made; and

(ii) In FORM GST APL-04, in cases where rectification of an order issued under section 107 or section 108 of the said Act is made.

6. The rectification is required to be made only in respect of demand of such input tax credit which has been alleged to be wrongly availed in contravention of provisions of sub-section (4) of section 16 of the said Act, but where such input tax credit is now available as per the provisions of sub-section (5) or sub-section (6) of the said section 16.

7. Where such rectification adversely affects the said person, the principles of natural justice shall be followed by the authority carrying out such rectification.

Annexure A

Proforma to be uploaded by the registered person along with the application for rectification of order under the special procedure for rectification of order notified under section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017)

1. Basic Details:

(a) GSTIN:

(b) Legal Name:

(c) Trade Name, if any:

(d) Order in respect of which rectification application has been filed:

(1) Order Reference Number:

(2) Order Date:

2. Details of demand confirmed in the said order:

(Amount in Rs.)

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3. Out of the amount mentioned in the Table in serial number 2 above:

(a) The details of the demand confirmed in the said order, of the input tax credit wrongly availed on account of contravention of sub-section (4) of section 16, which is now eligible as per sub-section (5) of section 16 of Central Goods and Services Tax Act, 2017 (12 of 2017) (the said Act):

(Amount in Rs.)

and/or

(b) The details of the demand confirmed in the said order of the input tax credit wrongly availed on account of contravention of sub-section (4) of section 16, other than that mentioned in (a) above, which is now eligible as per sub-section (6) of section 16 of the said Act:

(Amount in Rs.)

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4. Declaration:

1. I undertake that, no appeal under section 107 or section 112 of the said Act is pending against the order against which this rectification application is filed.

2. I declare that all information provided by me is accurate and truthful. I understand that any incorrect declaration or suppression of facts will render this application void and may lead to recovery proceedings for the outstanding dues along with applicable interest and penalties.

5. Verification:

I________________ (name of the authorized signatory), hereby declare that the information provided above is true and correct to the best of my knowledge and belief. I understand that any incorrect declaration or suppression of facts will render my application void.

Signature of authorized signatory

Name/Designation

Email address

Mobile No.

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[F. No. CBIC-20006/20/2023-GST]

RAGHAVENDRA PAL SINGH, Director

Key Highlights of the Notification No. 22/2024 - Central Tax

1. Special Rectification Procedure:
   The notification introduces a special procedure for rectifying GST orders related to the wrong availment of Input Tax Credit (ITC), specifically under sections 73, 74, 107, or 108, where ITC was wrongly denied under section 16(4), but is now eligible under sections 16(5) or 16(6).
2. Eligibility for Rectification:
   This procedure is available for registered persons who have not filed an appeal against the original demand order.
3. Filing Deadline:
   Taxpayers must file their rectification application electronically within six months from the date of the notification.
4. Proforma Submission:
   Along with the application, taxpayers must submit detailed information in the prescribed proforma (Annexure A) regarding the demand and ITC eligibility.
5. Authority for Rectification:
   The officer who issued the original order will handle the rectification process and must issue the corrected order within three months.
6. Electronic Upload of Rectified Order:
   The rectified order summary must be uploaded electronically in FORM GST DRC-08 or FORM GST APL-04, depending on the section under which the order was issued.
7. Scope of Rectification:
   Rectification is applicable only for ITC claims that were wrongly denied but are now eligible under the revised provisions of section 16.
8. Natural Justice:
   If the rectification adversely impacts the taxpayer, the principles of natural justice must be followed by the concerned authority.

This notification aims to provide a clear and efficient process for taxpayers to rectify past errors regarding ITC availment, ensuring better compliance and resolving disputes efficiently.

Conclusion

The issuance of Notification No. 22/2024 - Central Tax marks a significant step in simplifying the process for rectifying GST-related discrepancies, particularly concerning the wrong availment of Input Tax Credit (ITC). By offering a structured and time-bound procedure for rectification, the notification provides much-needed relief to taxpayers who were previously penalized for errors now rectified under updated provisions.

The six-month window to file the rectification application, along with the requirement for detailed information and the upload of rectified orders, ensures transparency and accountability in the system. Additionally, the safeguard of natural justice ensures that taxpayers are protected if the rectification leads to an adverse outcome.

Ultimately, this move not only streamlines the dispute resolution process but also encourages better compliance with GST regulations, fostering a more efficient and taxpayer-friendly environment. Taxpayers who meet the criteria for rectification should take full advantage of this provision to resolve outstanding issues and ensure their ITC claims are in line with current provisions.

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