The Delhi High Court has ruled that as per proviso 3 to Section 161 of the Delhi Goods and Service Tax Act, 2017, an order rejecting the rectification application submitted via the taxpayer cannot be passed without first hearing the taxpayer.
It was said by A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta that the hearing can be dispensed with only where the rectification application is authorised. It noted.
“As per proviso 3 to Section 161, the rectification order, if allowed in favour of the Petitioner seeking rectification, hearing can be dispensed with. However, if the rectification is to be decided adversely affecting the right of the applicant, the principles of natural justice have to be followed and a hearing ought to be given, if sought.”
In this case, a Show cause notice was issued to the applicant for the incorrect claim of the Input tax credit for the specific purchases made via it, and a final order raising a demand of Rs 1,18,98,415 was passed.
The applicant filed an application asking for the rectification of the final order, quoting calculation errors. It has been furnished that it never claimed an Input tax credit (ITC) for Rs 24,43,640 concerning one M/s Arun Sales, and if this amount is deducted, the demand shall be much lesser.
The application was rejected vide an impugned order.
The applicant before the High Court argued that at the time of the rectification application, the applicant must be provided a chance of hearing as per proviso 3 to Section 161 of the DGST Act.
It was furnished by the respondent that the applicant was provided with a full chance in the main proceedings, and the rectification was dismissed since the GST department did not discover an error evident on the face of the record.
HC expressed that as an adverse order was passed against the applicant, “the personal hearing ought to have been afforded”.
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As per that, the order in the rectification application was set aside with the department’s direction to decide it afresh, post providing a chance of hearing to the applicant.
Appearance: Mr. Pulkit Verma and Mr. Peyush Pruthi, Advs for Petitioner; Ms. Vaishali Gupta, Panel Counsel (Civil), GNCTD
| Case Title | HVR Solar Private Limited vs. Sales Tax Officer Class Ii Avato Ward 67 & ANR |
| Citation | W.P.(C) 4506/2025 & CM APPL. 20845/2025 |
| For Petitioner | Mr. Pulkit Verma and Mr. Peyush Pruthi |
| For Respondent | Ms. Vaishali Gupta |
| Delhi High Court | Read Order |
