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 2018-19. The respondent, The Assistant Commissioner (Inspection) (ST-IU), rejected this application via an order dated March 28, 2025. The petitioner challenged this rejection order, contending that it was passed without assigning reasons and without affording a reasonable opportunity of hearing. The petitioner sought to quash the rejection order and direct the respondent to reconsider the rectification application after providing a hearing.

Held

The Court held that the impugned order dated March 28, 2025, rejecting the petitioner's Rectification Application, is liable to be set aside. The Court found that the order did not provide 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 held that even when a rectification application is made by the assessee and is rejected without considering the reasons or providing justification for rejection, the assessee should be put on notice. The Court interpreted the third proviso to Section 161 as embodying principles of natural justice, requiring an opportunity of hearing when an order is made adverse to the assessee. Therefore, the order was set aside as being contrary to Section 161. The Rectification Application was to be reconsidered afresh by the respondent after affording the petitioner an opportunity of hearing, and appropriate orders were to be passed in accordance with law.

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 (or CGST Act as discussed in arguments)? 2. Whether the proviso to Section 161 of the CGST Act, mandating an opportunity of hearing, applies when a rectification application is made by the assessee and is rejected? The petitioner argued that the respondent rejected the rectification application without assigning any reasons and without providing an opportunity of hearing, which is contrary to law. The respondent contended that reasons are not required for rejecting a rectification application if there is no apparent error. They further argued that the proviso to Section 161, requiring an opportunity of hearing, is applicable only when the Assessing Officer initiates rectification suo motu and the order is detrimental to the assessee. In this case, the application was made by the petitioner, and no apparent error was indicated, thus no hearing was necessary.