The Hon’ble Delhi High Court in the case of Delhi MSW Solutions Ltd. v. Assistant Commissioner of State Tax [Writ Petition Civil 4636 of 2025 dated April 15, 2025] disposed of the writ petition, directed the concerned authority to grant a personal hearing with respect to rectification application proceedings and communicate the hearing date through both the official portal and counsel of the Assessee. All rights and remedies of the Assessee regarding the rectification order were left open.
Facts:
M/s Delhi MSW Solutions Limited (“the Petitioner”) were served a Show Cause Notice dated November 19, 2024 (“the Impugned SCN”) on the ground that availment of excess Input Tax Credit (“ITC”) by the Petitioner. The Petitioner duly replied to the SCN.
The Petitioner’s Counsel submitted that the reply has not been considered by the adjudicating authority and hence the matter deserves to be remanded to the Adjudicating Authority (GST Department) (“the Respondent-1”).
After perusing the matter, the Court had directed the Assistant Commissioner (“Respondent 2”) to join the proceedings virtually. Thereafter, he explained that the entire reply has been considered. In fact, the initial demand as can be seen from the Impugned SCN was to the tune of Rs. 7,74,72,844/- and after considering the reply, the same has been reduced to the amount of Rs. 1.60 crore approximately.
During the hearing, it emerged that a rectification application under Section 161 of Central Goods and Services Tax Act, 2017 (“the CGST Act”) had already been filed by the Petitioner and was pending before the Respondent-2.
Consequently, an Order dated February 28, 2025 (“the Impugned Order”) was passed, whereby a demand of Rs 1,60,35,990 was confirmed against the Petitioner, alleging excess availment of ITC.
Hence, the aggrieved by the Impugned Order filed the present writ petition before the Hon’ble High Court.
Issue:
Whether writ petition is maintainable when a rectification applicable is pending before the authority?
Held:
The Hon’ble Delhi High Court Writ Petition Civil 4636 of 2025 held as under:
- Opined that, in the rectification application, a personal hearing can be afforded to the Petitioner by the concerned official and an order can be passed in accordance with law. The date of hearing be communicated to the Petitioner, through the Portal as also through the Learned Counsel who is appearing that day.
- Held that, , all rights and remedies of the Petitioner in respect of both the Impugned Order as also the rectification order if any were left open Hence, the writ petition was disposed of without expressing any opinion on the merits of the demand.
Our Comments:
Section 161 of the CGST Act allows any authority, who has passed or issued any decision or order or notice or certificate or any other document, to rectify any error which is apparent on the face of record in such decision or order or notice or certificate or any other document, either on its own motion or where such error is brought to its notice by any officer appointed under the GST Act or by the affected person within a period of 3 months from the date of issue of such decision or order or notice or certificate or any other document, as the case may be.
In this regard, Rule 142(7) of the Central Goods and Services Tax Rules, 2027 (“the CGST Rules”) (as amended vide Notification No. 16/2019 – Central Tax dated March 29, 2019 w.e.f. April 01, 2019) provides that where a rectification of the order has been passed in accordance with the provisions of Section 161 of the CGST Act or where an order uploaded on the system has been withdrawn, a summary of the rectification order or of the withdrawal order shall be uploaded electronically by the proper officer in Form GST DRC-08.
The amendment carried out in Rule 142(7) has widened the scope of this rule to cover withdrawal of an order uploaded on the system. Now, in addition to order passed under Section 161 of the CGST Act, a summary of the rectification order or the withdrawal order shall be uploaded electronically by the proper officer in Form GST DRC-08.
It is to be noted that as seen from the cases above, the rectification can be done only where there is an error that is apparent on the face of record meaning thereby the errors that are obvious, visible in plain sight and that is not open for interpretation or debate.
Further, it should not affect the rights of the assessee and where such rectification adversely affects any person, the principles of natural justice are to be followed.
In the case of Transzone Logistics India (P.) Ltd. v. Sales Tax Officer, Avato [Writ Petition Civil No. 6583 of 2025 May 16, 2025] wherein the Hon’ble Delhi High Court held that as per proviso to Section 161, if rectification is to be decided adversely affecting assessee, principles of natural justice have to be followed and a hearing ought to be given. Whenever an adverse opinion is to be rendered against the party concerned, it is mandatory to afford a hearing, under 3rd Proviso to Section 161 of the CGST Act . Personal hearing ought to have been afforded to assessee, which had not been done. Accordingly, order in rectification application was to be set aside. After affording hearing to assessee, rectification application should be decided in accordance with law.
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