Order Rejecting the Application is Bereft of Reason: Orissa HC sets aside Rejection of Application filed u/s 161 [Read Order]

The Orissa High Court has set aside an order rejecting an application for rectification under the Goods and Services Tax Act 2017. The Court observed that it was violative of the principles of natural justice and passed without assigning reasons.

The writ petition, filed by M/s. Shree Bharat Motors Limited, challenged the order dated September 1, 2025 passed under Section 161 of the Central Goods andServices Tax Act, 2017 and the Odisha GST Act by the Assistant Commissioner of CT & GST, Bhubaneswar.

The case arose from audit proceedings conducted under Section 65 of the GST Act for the Financial Year 2020-21, due to proceedings initiated under Section 73. It was alleged that the taxpayer had claimed excess Input Tax Credit by not reversing ITC attributable to credit notes. An order dated February 27, 2025 was passed raising demand of tax, interest and penalty on the ground that ITC claimed in GSTR-3B exceeded the ITC reflected in GSTR-2A.

Aggrieved by the order, the taxpayer filed an application for rectification under Section 161 of the GST Act. The rectification application was, however, rejected by the Assistant Commissioner.

Before the High Court, the petitioner submitted that no excess ITC had been claimed and placed reliance on Circular No.105/24/2019-GST dated June 28, 2019 to contend that reversal of ITC was not required in cases involving post-sale discounts. The tax department opposed the writ petition contending that the petitioner had failed to reverse the excess ITC claimed.

After examining the records, the High Court observed that the reconciliation statements and supporting documents were available on the GST portal. The rectification application had been rejected without verification of records. No proper opportunity of personal hearing was granted either. The Court held that the rejection order was bereft of reason and suffered from legal infirmity.

Accordingly, the Division Bench comprising Chief Justice Harish Tandon and Justice Murahari Sri Raman, set aside the order and remanded the matter to the Assistant Commissioner of CT & GST, Bhubaneswar Circle directing reconsideration on merits. Consequently, the writ petition was disposed of.

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