2026-VIL-948-ALH
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SGST High Court Cases

GST – Scope of Section 161 of the CGST Act, 2017 - Denial of Opportunity to be Heard, Consideration to reply in rectification order - Ex-Parte Order - Petitioner was issued show-cause notice under Section 74 and submitted replies on 13.07.2021 and 18.07.2021; wholly ex-parte order came to be passed on 30.01.2025 without offering any consideration to replies furnished; subsequently order dated 05.02.2025 passed under Section 161 purporting to rectify error by offering ex-parte consideration to replies – Whether Adjudicating Authority can offer ex-parte consideration to reply in rectification order when fundamental error was denial of opportunity to be heard – HELD - When show-cause notice is issued, fundamental principle of natural justice requires that Petitioner be afforded meaningful opportunity to place its case on record and be heard. Denial of opportunity of hearing vitates proceedings beyond cure - Where Adjudicating Authority admits that replies were furnished by Petitioner and had not been considered in original order, the order suffered from fundamental procedural defect. Once fundamental error of denial of consideration to Petitioner's replies is noted, the power of rectification under Section 161 cannot be exercised to offer ex-parte merit review or to pass order creating tax demand without notice. The appropriate course was to recall original order and pass fresh order after issuing fresh notice to Petitioner for personal hearing. To allow ex-parte consideration in rectification order would amount to conceding power to review order on merits without issuing notice. Principles of natural justice are violated where Adjudicating Authority passes second ex-parte order after noticing that first order failed to consider Petitioner's submissions. The third proviso to Section 161 regarding non-prejudicial rectification does not apply where rectification involves fundamental procedural error – The impugned order is set aside; matter remitted to Adjudicating Authority to pass fresh order after affording opportunity of hearing to petitioner – The petition is allowed
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