An Order u/s 161 of DGST Act rejecting  Rectification Application can't be passed without Personal Hearing: Delhi HC [Read Order]

The Delhi High Court has ruled that, in accordance with proviso 3 to Section 161 of the Delhi Goods and Service Tax Act, 2017, an assessee cannot be heard before a judgment rejecting their rectification plea is issued.

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HVR Solar Private Limited, a show cause notice was issued to the Petitioner for wrongful availment of Input Tax Credit in respect of certain purchases made by it and a final order rarsing demand of Rs.1,18,98,415/- was passed. The petitioner had then moved an application seeking rectification of the final order citing calculation errors. It had submitted that it never claimed ITC for the amount of Rs.24,43,640/- in respect of one M/s Arun Sales and if this amount is deducted, the demand would be much lesser. The said application was however rejected vide impugned order.

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The petitioner argued before the High Court that, in accordance with proviso 3 to Section 161 of the DGST Act, the petitioner should have been given a hearing when the rectification application was being decided.

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The respondent argued that as the GST Department had not discovered an error that was obvious from the record, the rectification was rejected and the petitioner was given a full opportunity in the main proceedings. According to the High Court, "the personal hearing ought to have been afforded" because the petitioner was the subject of an adverse order.

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A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta observed that if the rectification order is granted in favor of the petitioner requesting rectification, hearings may be skipped in accordance with proviso 3 to Section 161. The standards of natural justice must be adhered to, nonetheless, and a hearing should be held if requested if the decision about the rectification has a negative impact on the applicant's rights.

The court set aside the order in the rectification application with a direction to the department to decide it afresh after affording a hearing to the petitioner.

To Read the full text of the Order CLICK HERE

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