The Delhi High Court has clarified that under the third proviso to Section 161 of the Delhi Goods and Services Tax (DGST) Act, 2017, authorities must grant a personal hearing to an assessee before rejecting their rectification application. The court emphasized that dispensing with a hearing is permissible only when the rectification application is approved.​

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A division bench comprising Justices Prathiba M. Singh and Rajneesh Kumar Gupta stated:​

"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."​

Case Background

In this case, the petitioner received a show cause notice alleging wrongful availment of Input Tax Credit (ITC) for certain purchases, leading to a demand of ₹1,18,98,415. The petitioner filed a rectification application, highlighting calculation errors, specifically noting that ITC of ₹24,43,640 related to M/s Arun Sales was never claimed. Despite this, the application was rejected without a personal hearing.​

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The petitioner argued that, according to the third proviso to Section 161 of the DGST Act, a personal hearing was mandatory before deciding on the rectification application. The respondent contended that ample opportunity was provided during the main proceedings and that no apparent error was found by the GST Department.​

The High Court concluded that since the rejection of the rectification application adversely affected the petitioner, a personal hearing was warranted. Consequently, the court set aside the rejection order and directed the Department to reconsider the application, ensuring adherence to the principles of natural justice.

Appearance: Mr. Pulkit Verma and Mr. Peyush Pruthi, Advs for Petitioner; Ms. Vaishali Gupta, Panel Counsel (Civil), GNCTD

Case title: HVR Solar Private Limited v. Sales Tax Officer Class Ii Avato Ward 67 & Anr

Case no.: W.P.(C) 4506/2025