Tvl.Kajah Enterprises (P) LTD vs. The Assistant Commissioner (Inspection) (St Iu)

Facts

The petitioner, Tvl. Kajah Enterprises (P) Ltd., filed a Rectification Application on March 11, 2025, seeking to rectify an Order of Assessment dated January 6, 2025, for the assessment year 2021-22. The respondent, The Assistant Commissioner (Inspection) (ST-IU), rejected this application by an order dated March 28, 2025. The petitioner contended that the rejection was made without assigning any reasons and without providing an opportunity of hearing. The respondent argued that reasons are not required for rejecting a rectification application if there is no apparent error, and the proviso for a hearing only applies when the revenue initiates rectification detrimental to the assessee. The petitioner challenged the rejection order through a writ petition before the Madurai Bench of the Madras High Court.

Held

The Court held that the impugned order dated March 28, 2025, rejecting the petitioner's Rectification Application, is liable to be set aside as it is contrary to the provisions of Section 161 of the CGST Act. The Court found that the order did not provide any reasons for rejecting the application, nor did it explain why there was no error apparent on the face of the record. Regarding the opportunity of hearing, the Court disagreed with the respondent's contention. It observed that while the third proviso to Section 161 contemplates a hearing when rectification adversely affects the assessee, the principles of natural justice also mandate that when a Rectification Application is made by an assessee and is being rejected without considering the reasons for rectification or by giving reasons for non-entertainability, the assessee must be put on notice. Therefore, the Court set aside the impugned order and directed the respondent to take the Rectification Application afresh, provide an opportunity of hearing to the petitioner, and pass appropriate orders in accordance with law. The Court explicitly stated that if any order is made on the Rectification Application, it is for the petitioner to work out his remedy.

Key Issues

1. Whether the respondent was required to assign reasons for rejecting the petitioner's Rectification Application under Section 161 of the TNGST Act/CGST Act, when the application was made by the assessee? 2. Whether the principles of natural justice, specifically the opportunity of hearing, are applicable when a Rectification Application filed by the assessee is rejected? Petitioner's Contention: The petitioner argued that the respondent rejected the Rectification Application without assigning any reasons and without affording an opportunity of hearing, which is contrary to law. They contended that the impugned order should be quashed and the respondent directed to consider the application after providing a hearing. Respondent's Contention: The respondent argued that reasons are not necessary for rejecting a rectification application if no apparent error is found. They further contended that the proviso to Section 161 of the CGST Act, mandating an opportunity of hearing, applies only when the Assessing Officer suo motu initiates rectification that is detrimental to the assessee. Since the application was made by the petitioner, and no error apparent was indicated, no hearing was required.