Karnataka High Court Holds Rectification Orders Under Section 161 of CGST Act Must Be Passed Within Six-Month Limitation Period

Karnataka High Court has clarified the statutory limitation period for passing rectification orders under Section 161 of the Central Goods and Services Tax Act, 2017 (CGST Act). The decision arose from a writ petition challenging the validity of a rectification order and related show-cause notice issued by the tax authorities.

The petitioner sought quashing of the rectification order dated 27.03.2025 and the show-cause notice dated 08.11.2024, both issued under Section 161 of the CGST Act. The petitioner also requested a declaration that the rectification proceedings were void for want of jurisdiction, and sought directions for unblocking input tax credit (ITC) in accordance with an earlier order.

The Court noted that an original order had been passed on 12.09.2024, which found the blocking of ITC by the tax authorities to be untenable and directed the unblocking of the ITC amounting to Rs. 21,83,938. Subsequently, the authorities issued a rectification order on 27.03.2025, which the petitioner contended was beyond the statutory limitation period prescribed by Section 161 of the CGST Act.

Upon examining the statutory provision, the Court observed that Section 161 of the CGST Act prescribes a six-month limitation period for passing rectification orders from the date of the original order. In this case, the rectification order was admittedly issued after the expiry of six months from the original order dated 12.09.2024. The Court held that the impugned rectification order, having been passed beyond the stipulated period, was unsustainable in law.

Consequently, the Karnataka High Court issued a writ of certiorari, quashing both the rectification order dated 27.03.2025 and the show-cause notice dated 08.11.2024. The writ petition was accordingly allowed, reaffirming the principle that rectification proceedings under Section 161 of the CGST Act must strictly adhere to the statutory limitation period.