S. 161 CGST Act | Adjudicating Authority Can Dismiss GST Rectification Application Without Personal Hearing: Madras High Court

The issue before the bench was whether the third proviso to Section 161 of the TNGST Act, 2017, requires complying with the principles of natural justice even for dismissing a rectification petition.

Section 161 of the Goods and Services Tax Act, 2017 talks about the rectification of errors apparent on the face of the record.

The third proviso to Section 161 of CSGT, 2017 is triggered only when two cumulative conditions are fulfilled, first, there must be a "rectification" (an alteration), and second, that rectification must "adversely affect" a person.

The Bench of Justices G.R. Swaminathan and K. Rajasekar observed that “When the rectification application is dismissed as such without there being anything more, the original order stands as such. In that event, there is no rectification at all. When there is no rectification, there is no question of invoking the principles of natural justice.”

In this case, the appellant/assessee is engaged in the business of manufacturing cotton textiles. A GST audit was conducted under Section 65 of the Tamil Nadu Goods and Services Tax Act, 2017, during which certain discrepancies were identified.

A show cause notice was issued to the assessee by the department. Though an opportunity for personal hearing was granted, it was not availed by the assessee. Consequently, the department passed an order imposing tax, interest, and penalty. The assessee applied to rectify the order issued, but it was rejected.

Aggrieved by the same, the assessee filed a writ petition which was, which was dismissed by the Single Judge.

The assessee submitted that the rectification application could not have been dismissed without affording an opportunity of personal hearing. Thus, it violates principles of natural justice.

The bench stated that “it is entirely another thing to say that the third proviso to Section 161 of TNGST Act demands following the principles of natural justice even when there is no rectification. A plain reading of the said proviso does not yield any conclusion that formation of an adverse view while disposing of the rectification application would require complying with the principles of natural justice. That is not the plain meaning of the proviso.”

The bench noted that without alteration, there is no rectification. The third proviso applies only when there is rectification, and it affects a person. In other words, both elements must be present for the third proviso to be applicable.

It was further pointed out by the bench that when the legislature has indicated as to when the principles of natural justice should be followed, it is not for the writ court to add further circumstances or situations. The third proviso talks of rectification, which is a positive act. “Refusal to rectify” cannot be read into the expression “such rectification”.

The bench stated that there is no requirement that, before dismissing the rectification application, the authority must hear the applicant. The bench confirmed the order of the Single Judge.

In view of the above, the bench dismissed this petition.

Case Title: M/s. Eminent Textiles Mills Private Limited v. The State Tax Officer & Ors.

Citation: 2025 LiveLaw (Mad) 247

Case Number: W.A(MD) No.1821 of 2025 and C.M.P.(MD)No.10304 of 2025

Counsel for Appellant/Assessee: S. Renganathan

Counsel for Respondent/Department: R. Sureshkumar

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