HVR Solar Private Limited Vs Sales Tax Officer Class II Avato Ward 67 & Anr. (Delhi High Court)
The Delhi High Court addressed a petition filed by HVR Solar Private Limited against the Sales Tax Officer concerning the rejection of their application for rectification under Section 161 of the Delhi Goods and Service Tax Act, 2017 (DGST Act). HVR Solar had initially received a demand for wrongful availment of Input Tax Credit (ITC) following a show cause notice and subsequent order. The company then filed a rectification application, pointing out errors in the calculation of the demand, specifically regarding ITC claimed from M/s Arun Sales. They argued that they had never claimed this particular ITC and requested a personal hearing if the rectification was not satisfactory. However, the Sales Tax Officer rejected the rectification application without granting a personal hearing, stating the application was not satisfactory and providing reasons in an annexure.
The core issue before the High Court was whether a personal hearing was required while deciding the rectification application. The court referred to the third proviso of Section 161 of the DGST Act, which mandates adherence to the principles of natural justice when a rectification adversely affects any person. The court noted that while a hearing can be dispensed with if the rectification is allowed in favor of the applicant, it is necessary when the rectification is decided adversely. The Delhi High Court also cited a similar ruling by the Madras High Court in the Suriya Cement Agency case, which emphasized the need for a hearing when a rectification application is rejected without considering the reasons provided by the assessee. Consequently, the Delhi High Court set aside the order rejecting HVR Solar’s rectification application and directed the Sales Tax Officer to grant the petitioner a hearing and pass a fresh order in accordance with the law, leaving all rights and contentions of both parties open.
