Clarification on Notification No. 22/2024- Central Tax: Special Procedure for Rectification of Orders under GST

Introduction

On 8th October 2024, the Central Government issued Notification No. 22/2024- Central Tax (S.O. 4373(E)), establishing a special procedure for rectification of orders concerning the wrong availment of Input Tax Credit (ITC). This notification addresses registered taxpayers who have received orders under Section 73, 74, 107, or 108 of the Central Goods and Services Tax Act, 2017 (CGST Act), confirming demand for wrong ITC availment due to the contravention of Section 16(4) of the Act.

However, the notification clarifies that where ITC is now available under Section 16(5) or 16(6), and an appeal has not been filed, taxpayers can seek rectification of the order. Here’s a breakdown of the key elements of the notification.

Scope and Applicability

This notification is applicable to a specific class of registered persons who meet the following conditions:

1. An order has been issued against them under Section 73, 74, 107, or 108 confirming the wrong availment of ITC due to a contravention of Section 16(4).
2. The wrong ITC availed is now available under the provisions of Section 16(5) or Section 16(6).
3. No appeal has been filed against the order under Section 107 or 112 of the Act.

The special procedure laid out is intended to facilitate the rectification of such orders and provide relief where ITC is now eligible.

Filing the Rectification Application

To utilize this special procedure, taxpayers must:

• File an application electronically on the common portal within six months from the date of issuance of the notification.
• Upload the required information using the proforma provided in Annexure A.

The proforma includes details such as the taxpayer’s GSTIN, order reference number, and a breakdown of the demand for wrongly availed ITC, as well as the ITC that is now eligible.

Rectification Process

• The proper officer responsible for issuing the original order will be tasked with reviewing and deciding on the rectification application. The officer must take action on the application and issue a rectified order, ideally within three months from the date of the application.
• Once the rectified order is issued, the officer will upload a summary of the rectification electronically:
  • In FORM GST DRC-08 for orders under Section 73 or 74.
  • In FORM GST APL-04 for orders under Section 107 or 108.

Key Clarifications

• Eligibility of ITC: The rectification is applicable only to the portion of ITC that was wrongly availed due to Section 16(4) violations, but is now permissible under Section 16(5) or 16(6). This includes ITC related to certain imported goods or supply chains where subsequent legal provisions allow for its availment.
• Principles of Natural Justice: If the rectification adversely affects the registered person, the authorities are required to follow the principles of natural justice, ensuring that the taxpayer is given a fair opportunity to present their case. 

Proforma to be uploaded by the registered person
Along with the application for rectification of an order under the special procedure for rectification of the order notified under Section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017)The proforma requires detailed information to support the rectification request, including:

Annexure A

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.)

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 the Central Goods and Services Tax Act, 2017 (12 of 2017) (the said Act):

(Amount in Rs.)

(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.)

Signature of Authorised signatory

Name/Designation

Email address

Mobile No.

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

RAGHAVENDRA PAL SINGH, Directo

Conclusion

Notification No. 22/2024 provides much-needed relief to taxpayers who have received demands for wrong availment of ITC due to contraventions of Section 16(4), but where such ITC is now eligible under Section 16(5) or 16(6). By following the outlined procedure, taxpayers can seek rectification and ensure that they are not unfairly penalized for ITC availment that is now legally permissible.

For those affected, it is crucial to act promptly by filing their rectification application within the six-month period specified in the notification.