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 2019-20. The respondent, The Assistant Commissioner (Inspection) (ST-IU), rejected this application via an order dated March 28, 2025. The petitioner contends that the respondent rejected the application without assigning reasons and without providing an opportunity of hearing. The respondent argued that reasons are not required for rejection if no apparent error is found, and the proviso for a hearing applies only when the revenue initiates rectification detrimental to the assessee. The petitioner seeks to quash the rejection order and direct the respondent to consider their rectification application after 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 that it is not required when an assessee files the application. The Court reasoned that the principles of natural justice are inbuilt in the third proviso to Section 161. 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 considered afresh by the respondent after giving an opportunity of hearing to the petitioner, who could then pursue further remedies if necessary.

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 argued by the respondent)? 2. Whether the proviso to Section 161 of the CGST Act, mandating an opportunity of hearing, applies when an assessee files a Rectification Application and the same is rejected? Petitioner's arguments: The respondent rejected the Rectification Application without assigning any reasons and without affording an opportunity of hearing, which is contrary to law. The impugned order should be set aside with a direction to the respondent to consider the application after a hearing. Respondent's arguments: Reasons need not be attributed in rejecting a rectification application if no apparent error is found. The proviso for a hearing under Section 161 arises only when the Assessing Officer suo motu initiates rectification that is detrimental to the assessee. In this case, the application was made by the petitioner, and no error apparent was indicated, thus no interference is required.