The Madurai bench of Madras High Court ruled that clear reasons must be provided if the GST ( Goods and Services Tax ) department is rejecting the rectification application under Section 161 of GST Act. The bench kept GST DRC-07 in abeyance.
The rectification application, which pointed out errors in the petitioner’s GST returns, was rejected without assigning valid reasons or providing an opportunity for the petitioner to present their case.
The petitioner, Ayyappa Pharma’s counsel, argued that the assessment order dated 02.01.2024, which formed the basis of the DRC-07 notice, was issued without giving the petitioner an opportunity to be heard.
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Subsequently, the petitioner filed a rectification application stating errors in the assessment. However, the application was dismissed by the GST department without assigning any reasons or offering a chance for the petitioner to explain their grounds.
The department contended that the rejection of the rectification application was within its authority, as no satisfactory reasons had been provided by the petitioner. The department’s counsel further argued that the writ petition challenging the rejection should not have been entertained, as the petitioner had already sought rectification of the original assessment order.
The court found that the department failed to provide any detailed reasoning for rejecting the rectification application. It observed that under Section 161 of the Tamil Nadu GST Act, errors apparent on the face of the record can be rectified, and the reasons for rejection must be clearly stated.
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Justice K. Kumaresh Babu noted that the petitioner had pointed out an error in their GST returns and sought a revised assessment, but this was not adequately considered by the department. Thus, it kept the DRC-07 order in abeyance.
The bench also set aside the rejection order and remitted the matter back to the department for reconsideration. It directed the department to pass a fresh order, taking into account the petitioner’s reasons and providing a detailed explanation if the rectification is not entertained. The court also instructed the department to offer the petitioner a personal hearing as per the proviso under the Act. Accordingly, the writ petition was disposed of
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