Facts of the Case

The petitioner, Sulochana.M, challenged an assessment order in Form GST DRC-07 dated 04.02.2025 for the tax period 2017-18, and a subsequent order dated 19.03.2025 passed under Section 161 of the TNGST Act, 2017 rejecting her application seeking rectification of that assessment order. The petitioner's case was that she had earlier been issued a show cause notice in Form GST DRC-01 dated 30.09.2023 for the same financial year, to which she had filed a reply before an order dated 28.12.2023 was passed in Form GST DRC-07. She had also preferred an appeal against that 28.12.2023 order before the Appellate Commissioner, which was acknowledged on 16.09.2024. Against this background, she sought quashing of the order rejecting her rectification application, contending that it suffered from non-application of mind and was without jurisdiction.

Issues Involved

  1. Whether the rejection of the petitioner's rectification application under Section 161 of the TNGST Act, 2017, ignored the fact of an earlier order already passed for the very same financial year and a pending appeal against it.
  2. Whether such rejection, in light of this earlier order, reflected non-application of mind requiring interference in writ jurisdiction.

Petitioner's Arguments

  • An order dated 28.12.2023 in Form GST DRC-07 had already been passed for the same financial year 2017-18, against which an appeal was pending before the Appellate Commissioner.
  • The subsequent rejection dated 19.03.2025 of her Section 161 rectification application ignored this earlier order and hence suffered from non-application of mind.
  • She had duly replied to the original show cause notice dated 30.09.2023 prior to the order dated 28.12.2023.

Respondent's Arguments

  • The Additional Government Pleader appeared for the respondent-Assistant Commissioner and made submissions on instructions before the Court, without specifically disputing the sequence of prior proceedings placed on record by the petitioner.

Court Order / Findings

  • The Court found that there was a prima facie indication that the rejection of the Section 161 application suffered from non-application of mind, given the earlier order dated 28.12.2023 already passed in Form GST DRC-07 for the same period.
  • The impugned order dated 19.03.2025 rejecting the rectification application was quashed and remitted to the respondent for a fresh order in accordance with law, preferably within six months from receipt of the order.
  • Recovery proceedings pursuant to the 04.02.2025 assessment order were directed to be kept in abeyance pending disposal of the rectification application.
  • The petitioner was directed to be heard before any order is passed on the recovery proceedings.

Important Clarification

  • Where a rectification application under Section 161 is rejected without reference to the fact that an earlier assessment order already exists (and is under appeal) for the very same period, such rejection is liable to be treated as suffering from non-application of mind.
  • Pending disposal of a remitted rectification application, recovery proceedings under the original assessment should be held in abeyance and the assessee heard before any coercive step.

Sections Involved

  • Section 161, TNGST Act, 2017 — empowers rectification of errors apparent on the face of the record in any decision, order, notice, certificate or other document.
  • Form GST DRC-07 — summary of the order creating a demand under the GST law.

Decision – In Favour of

The writ petition was allowed in favour of the Assessee, with the rejection order quashed and the matter remitted for fresh consideration within a time-bound period, and recovery kept in abeyance meanwhile.

Case Details

Court: Madurai Bench of the Madras High Court
Case No.: W.P.(MD).No.17731 of 2025 and W.M.P.(MD) No.13538 of 2025
Coram: Hon'ble Mr. Justice C. Saravanan
Date of Order: 01.07.2025

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