Eminent Textiles Mills Pvt. Ltd. Vs State Tax Officer & Others (Madras High Court)
Refusal to Rectify under GST does not tantamount to Rectification and hence does not require hearing, Rules Madras High Court
The Petitioner filed a rectification application under Section 161 of the TNGST Act, 2017 against a tax order passed by the respondent. However, the rectification application was rejected without a personal hearing. Aggrieved by the same, the petitioner preferred writ petition challenging the rejection, which was dismissed by a Single Judge. Accordingly, the Petitioner preferred a Writ Appeal before Division bench.
The Petitioner contended that denial of personal hearing before rejecting rectification violated the principles of natural justice, as envisaged under the third proviso to Section 161. The Petitioner relied on the decisions in case of Suriya Cement Agency, HVR Solar Pvt. Ltd., and Pinstar Automative India Pvt. Ltd., which suggested hearing is mandatory before adverse rejection.
However, upon perusal of the legal provisions and jurisprudence in this regard, the Court held the term “rectification” implies a positive act of alteration to the original order. The third proviso applies only when rectification is actually carried out and adversely affects a person.
A rejection of rectification request does not alter the original order, hence it is not a “rectification”. Therefore, principles of natural justice are not applicable in such rejection cases. The Division Bench disagreed with earlier rulings that interpreted “refusal to rectify” as requiring a hearing. Held that courts cannot widen the statutory text of the third proviso to include cases of mere rejection.
