In a recent decision, the Allahabad High Court addressed the limitations of Section 161 of the GST Act concerning rectification of orders. The case involved Opasil Pigments and Chemicals Pvt. Ltd. and M/s Shyam Enterprises, whose goods had been seized under the UP GST/CGST Act. Their appeals were initially allowed, quashing the penalties imposed under Section 129(3). However, an application was later filed under Section 161 for rectification, citing a pending Special Leave Petition (SLP) before the Supreme Court, leading to the recall of the appellate orders.
The petitioners contended that Section 161 is strictly for rectifying errors apparent on the record and not for reviewing or recalling orders. They referenced a precedent that limits rectification to obvious errors. The central issue was whether the mere pendency of an SLP could justify recalling an appellate order under this section.
The High Court clarified that Section 161 is intended only for correcting mistakes that are evident without detailed examination. It cannot be used to review or replace a concluded appellate decision. The court emphasized that the filing of an SLP, without any interim order or stay, does not constitute an apparent error. Consequently, the court declared the recall orders illegal and restored the original appellate decisions in favor of the petitioners. Both writ petitions were allowed, reinforcing the limited scope of Section 161 as a rectification tool rather than a mechanism for review or appeal.
Order date: 04 Sept 2025
Parties: Opasil Pigments and Chemicals Pvt. Ltd. & M/s Shyam Enterprises v. State of U.P. & Ors.
Facts -
- The petitioners’ goods were seized under Section 129 of the UP GST/CGST Act. The appellate authority allowed their appeals on merits by order dated 08.02.2020, quashing the penalty under Section 129(3).
- Subsequently, Department moved an application under Section 161 for rectification, citing pendency of an SLP before the Supreme Court. Based on this, the appeal orders were recalled.
- The petitioners argued that Section 161 permits only rectification of an error apparent on the face of record, not review or recall. Reliance was placed on Deva Metal Powders Pvt. Ltd. V. CTT, U.P. (SC, 2008), which limits rectification to patent errors visible at a glance.
Issue -
- Whether pendency of an SLP before the Supreme Court can justify recall of an appellate order under Section 161 of the GST Act?
Order -
- The single bench of the Hon'ble High court held that Section 161 is confined to rectification of mistakes apparent from the record and cannot be used as a tool for review or substitution of a concluded appellate order. The mere filing of an SLP without any interim order or stay does not amount to an error apparent on the face of record.
- The reliance on Section 161 by the authorities to recall a fully reasoned appellate order was therefore held illegal.
- The impugned rectification/recall orders were quashed, and the original appellate orders in favour of the assessees were restored. Both writ petitions were allowed.
