Sri Ganpati Enterprises vs. Sales Tax Officer Class Ii/Avato, Ward 82 & Ors.
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The Petitioner, Sri Ganpati Enterprises, filed a writ petition challenging an order dated August 25, 2024, and a consequential rectification order dated February 28, 2025. The primary contention was that the rectification application filed by the Petitioner was rejected without affording a proper hearing. The Petitioner argued that under Proviso 3 to Section 161 of the Central Goods and Service Tax Act, 2017, a hearing should have been granted. The Respondent GST Department contended that the rectification application was rejected as not maintainable, and a detailed order was passed. The Petitioner relied on a previous decision of the Delhi High Court in HVR Solar Private Limited vs. Sales Tax Officer Class II/AVATO, Ward 67 & Anr.
Held
The Court held that as per Proviso 3 to Section 161 of the Central Goods and Service Tax Act, 2017, if an order is passed adversely affecting the assessee, the principles of natural justice require that a hearing be afforded. The Court noted that the rectification application was rejected without giving the Petitioner a proper hearing. Citing the decision in HVR Solar Private Limited, the Court agreed that a personal hearing ought to have been provided. Consequently, the order dated February 28, 2025, rejecting the rectification application, was set aside. The Court remanded the rectification application for fresh consideration, directing that the Petitioner be afforded a hearing and a fresh order be passed in accordance with the law.
Key Issues
1. Whether the rejection of the Petitioner's rectification application vide order dated February 28, 2025, without granting a personal hearing, violates the principles of natural justice as enshrined in Proviso 3 to Section 161 of the Central Goods and Service Tax Act, 2017? Petitioner's Argument: The Petitioner argued that Proviso 3 to Section 161 mandates a hearing when an order is passed adversely affecting the assessee, which was not done in this case. They relied on the Delhi High Court's decision in HVR Solar Private Limited vs. Sales Tax Officer Class II/AVATO, Ward 67 & Anr. Respondent's Argument: The Respondent GST Department submitted that the rectification application was rejected as not maintainable, and a detailed order was passed, implying no hearing was necessary.
Sections Cited
Section 161
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Cause title — parties, addresses and appearances
O R D E R % 13.05.2025
This hearing has been done through hybrid mode.
The present writ petition has been filed by the Petitioner-Sri Ganpati Enterprises under Article 226 and 227 of the Constitution of India inter alia seeking to set aside the order dated 25th August, 2024 and consequential rectification order dated 28th February, 2025. The only ground being pressed in the present case is that the Petitioner has filed a rectification application in respect of the impugned order dated 25th August, 2024. 3. It is the case of the Petitioner that the rectification application was This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 22:01:15
rejected vide order dated 28th February, 2025 without giving a proper hearing. Ld. Counsel for the Petitioner submits that the only ground that he presses is that under Proviso 3 to Section 161 of Central Goods and Service Tax Act, 2017, the hearing ought to have been granted in the rectification application. Reliance is placed upon decision of this Court in HVR Solar Private Limited vs. Sales Tax Officer Class II/AVATO, Ward 67 & Anr (W.P.(C) 4506/2025)
On behalf of the Respondent, ld. Counsel for the GST Department submits that the rectification application has been rejected as being not maintainable and a detailed order has been passed as well.
As held in HVR Solar (Supra) under Proviso 3 to Section 161, if any order would be passed adverse to the Assessee, the principles of Natural Justice have to be followed. The relevant portion to the said order is set out below:
As per proviso 3 to Section 161, the rectification order, if allowed in favour of the Petitioner seeking rectification, hearing can be dispensed with. However, if the rectification is to be decided adversely affecting the right of the applicant, the principles of natural justice have to be followed and a hearing ought to be given, if sought.
The Madras High Court has in its decision in Suriya Cement Agency (supra) also observed as under:
“8. A perusal of the order does not also indicate that there had been no error apparent on the record to reject the rectification. He had only extracted the tables indicating the figures which the petitioner is liable to pay. There is also no reasonings as to why there is no error apparent on the face of the record. For this reason, the impugned order dated 02.02.2024 is liable to be set aside. Even though, strenuous efforts had been made by the learned Additional Government Pleader that no personal hearing need to be given when an application had been made at the instance of the assessee, I am not in agreement with the learned This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 22:01:15
Additional Government Pleader. The Proviso indicates that when an order is being made adverse to the assessee, then he should be given an opportunity of being heard when the rectification adversely affects any person. The principles of natural justice had been inbuilt by way of the 3rd Proviso to Section 161. If pursuant to a Rectification Application, if a rectification is made and if it adversely affects the assesse, Proviso 3 contemplates an opportunity of hearing to be given. However, when an Rectification Application is made at the instance of assessee and the rectification is being sought to be rejected without considering the reasons for rectification or by giving reasons as to why such rectification could not be entertained. It is also imperative that the assessee to be put on notice. For the aforesaid reasons, I am inclined to hold that the order of rectification passed by the first respondent dated 02.02.2024 is contrary to the provisions of Section 161 and in that aspect, the same alone is set aside and the Rectification Application filed by the petitioner shall be taken afresh by the first respondent and after giving an opportunity to the petitioner, the first respondent shall pass appropriate orders and in accordance with law. If any such order is made in the Rectification Application, it is for the petitioner to work out his remedy in the manner known to law.”
In view of the above legal position, the personal hearing ought to have been afforded to the Petitioner, which has not been done. Accordingly, the order in rectification application dated 28th February, 2025 is set aside.
Let the Petitioner be afforded a hearing in the rectification application and the order be passed in accordance with law.”
In view of the above legal position, the rectification application alone is remanded for fresh consideration. Notice of personal hearing shall be given to the Petitioner on the following e-mail address: email: pulkit@enurelegal.com This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 22:01:15
After hearing the Petitioner, fresh order on the rectification application shall be passed in accordance with law.
Accordingly, the present writ petition is disposed of. All the pending applications, if any, are also disposed of. PRATHIBA M. SINGH, J. RAJNEESH KUMAR GUPTA, J. MAY 13, 2025/MR/Ar. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/07/2025 at 22:01:15
Reproduced from the public record of the Delhi High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.