How to File a Rectification Application as per Notification No. 22/2024-CT

Introduction

On January 7, 2025, a significant update was announced for taxpayers under the Goods and Services Tax (GST) regime. This update pertains to Notification No. 22/2024 – CT, issued on October 8, 2024, which provides relief to registered persons facing demands for the wrongful availment of Input Tax Credit (ITC) under specific circumstances. The move follows the recommendations of the 54th GST Council meeting and introduces a critical rectification mechanism.

Context of Notification No. 22/2024-CT

As per the notification, taxpayers who were issued demand orders under section 73, section 74, section 107, or section 108 of the Central Goods and Services Tax (CGST) Act, 2017, for contravening sub-section (4) of section 16—relating to wrongful availment of ITC—can now file applications to rectify these orders. This provision applies specifically to cases where ITC has become eligible under the newly inserted sub-sections (5) and (6) of section 16 of the Act, provided no appeal against the order has been filed.

Key Highlights of the Notification

• Applicability: Taxpayers who were issued demand orders for wrongful availment of ITC on account of contravention of sub-section (4) of section 16 can now seek rectification if such ITC is eligible under sub-sections (5) and/or (6).
• Scope of Relief: The rectification process allows taxpayers to address the demand orders issued under sections 73, 74, 107, and 108 and claim eligible ITC as per the updated provisions.
• Timeframe for Filing: Applications for rectification must be submitted within six months from the date of issuance of Notification No. 22/2024-CT.

Filing Application for Rectification

A new functionality has been introduced on the GST Portal, enabling taxpayers to file rectification applications. Here is a step-by-step guide to utilizing this feature:

1. Login to the GST Portal: Access the GST Portal using your credentials.
2. Navigate to Application Section: Go to Services > User Services > My Applications.
3. Select Application Type: Choose “Application for rectification of order” from the dropdown menu in the Application Type field.
4. Initiate New Application: Click on the NEW APPLICATION button to begin the process.
5. Download Annexure A: A hyperlink is provided to download the proforma in Annexure A (in Word format). Fill out this document with details of the demand order and relevant ITC eligibility under sub-sections (5) and/or (6) of section 16.
6. Upload and Submit: Upload the completed Annexure A and submit the application for rectification.

Provisions for Rectification

• The proper officer who issued the original order shall handle the rectification application.
• A decision on the application will be made, and a rectified order will be issued within three months from the date of application submission.
• Summary of the rectified order will be uploaded electronically in FORM GST DRC-08 (for orders under sections 73/74) or FORM GST APL-04 (for orders under sections 107/108).

Conditions for Rectification

• Rectification applies only to ITC wrongly availed under sub-section (4) of section 16 but now eligible under sub-sections (5) or (6).
• If rectification adversely impacts the taxpayer, principles of natural justice shall be followed.

Declaration and Verification

Taxpayers must provide a declaration confirming:

1. No appeal is pending under section 107 or section 112 for the order against which rectification is sought.
2. All information provided is accurate, and any misrepresentation may lead to recovery proceedings.

Benefits of the Update

This update provides taxpayers with the opportunity to:

• Rectify past compliance issues arising from the wrongful availment of ITC.
• Align their ITC claims with the updated provisions of section 16, ensuring compliance and reducing potential liabilities.

Conclusion

The introduction of this rectification functionality underscores the government’s commitment to addressing taxpayer concerns and simplifying compliance. Taxpayers are encouraged to review their past ITC claims and, where applicable, utilize this mechanism to rectify demand orders issued under sections 73, 74, 107, and 108. For further details, taxpayers should refer to Notification No. 22/2024-CT and the relevant provisions of the CGST Act, 2017.