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 2020-21. The respondent, The Assistant Commissioner (Inspection) (ST-IU), rejected this application by an order dated March 28, 2025, without assigning specific reasons for not finding an apparent error and without affording the petitioner an opportunity of hearing. The petitioner challenged this rejection order before the High Court, seeking its quashment and a direction to the respondent to consider 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 as to why there was no error apparent on the face of the record, which is a requirement. Furthermore, the Court disagreed with the respondent's contention that no personal hearing is necessary when an application is made by the assessee. The Court reasoned that the third proviso to Section 161 of the CGST Act, embodying principles of natural justice, contemplates an opportunity of hearing when an order is made adverse to the assessee. However, even when a rectification application is made by the assessee and is rejected without considering the reasons for rectification or providing reasons for rejection, it is imperative that the assessee be put on notice. Therefore, the order was set aside as being contrary to the provisions of Section 161. The Rectification Application was to be taken afresh by the respondent, who was directed to pass appropriate orders after affording the petitioner an opportunity of hearing.

Key Issues

1. Whether the respondent, in rejecting the petitioner's Rectification Application under Section 161 of the TNGST Act, was required to assign reasons for not finding an apparent error on the face of the record? 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, even if the rejection is not detrimental to the assessee's interest? Petitioner's arguments: The respondent rejected the rectification application without assigning any reasons as to why the order of assessment did not suffer from any apparent error and, crucially, without providing an opportunity of hearing. Therefore, the impugned order should be set aside with a direction to the respondent to reconsider the application. Respondent's arguments: Reasons need not be attributed when rejecting a rectification application; the authority only needs to ascertain if there was an apparent error. The proviso to Section 161 of the CGST Act, mandating 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 interference is required.