Facts of the Case

M/s Ganpati International challenged an Order-in-Original dated 31.01.2025 passed by the CGST Department, Delhi North, concerning denial of Input Tax Credit availed from M/s Swagat Enterprises, which was alleged to have issued goods-less invoices. The show-cause notice, issued to over 100 noticees, proposed a demand of Rs.6,65,415 against the petitioner. Aggrieved that the tax had been erroneously computed by including the value of the entire goods, the petitioner filed a rectification application — which was, however, adjudicated and rejected by an official of the Delhi (State) GST Department, on 24.06.2025, even though the original Order-in-Original had been passed by the CGST Department.

Issues Involved

  1. Whether a rectification application against an order passed by the CGST Department can validly be decided by the Delhi (State) GST Department.
  2. Whether the rectification order is sustainable where no personal hearing was granted to the petitioner.

Petitioner's Arguments

  • The demand raised is unsustainable as the tax has not been correctly computed and the value of the entire goods has erroneously been included.
  • The rectification order passed by the Delhi GST Department is impermissible in law since the original Order-in-Original was passed by the CGST Department.

Respondent's Arguments

  • The Standing Counsel for the Delhi GST Department fairly conceded that, ordinarily, where the original order is passed by the CGST Department, a consequent rectification application ought to be dealt with by the same department.

Court Order / Findings

  • The Court noted that the petitioner had not been given a personal hearing in the rectification application, contrary to the third proviso to Section 161.
  • It also noted that the rectification order had admittedly been passed by the wrong department.
  • On both grounds, the rectification order dated 24.06.2025 was set aside, and the rectification application directed to be heard afresh by the CGST Department, with a personal hearing to be granted per the third proviso to Section 161.

Important Clarification

  • A rectification application under Section 161 must be decided by the very authority/department that passed the original order — a rectification order passed by a different tax administration (Central vs. State) is liable to be set aside on that ground alone.
  • The third proviso to Section 161 requires a personal hearing before a rectification order adverse to the applicant is passed.

Sections Involved

  • Section 161 of the CGST Act, 2017 — rectification of errors apparent on the face of the record, including its third proviso mandating a hearing.
  • Section 74 of the CGST Act, 2017 — underlying determination of tax involving fraud/suppression (goods-less invoices).

Decision – In Favour of

In favour of the Assessee — the rectification order was set aside for lack of jurisdiction and denial of hearing, with the application to be reheard by the correct department.

Case Details

Court: High Court of Delhi at New Delhi — Case No.: W.P.(C) 12117/2025 & CM APPL. 49401/2025 — Coram: Hon'ble Justices Prathiba M. Singh and Shail Jain — Date of Order: 12 August 2025.

Link to Download the Order

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