HC: Rejection of GST Rectification Without Hearing Violates Principles of Natural Justice

The assessee contested a GST demand issued on 29 April 2024 and the rejection of their rectification request dated 30 July 2024. The demand originated from a Show Cause Notice for FY 2018-19, citing a Rs. 55.38 lakh discrepancy between GSTR-1 and GSTR-9, along with a Rs. 61.83 lakh ITC claim from non-compliant suppliers, totalling Rs. 2.38 crore.

The petitioners argued that their rectification was dismissed without a hearing, despite the relevant GSTR-1 already being in the record. They also challenged the validity of the GST limitation extension Notifications, which are currently under review by the Supreme Court.

Issue Raised: Does the rectification rejection without hearing violate natural justice, can a mismatch-based demand stand despite available records, and should the matter be kept pending in view of the Supreme Court’s decision on limitation extension?

HC’s Ruling: The Hon’ble High Court partly allowed the petition, holding that rejecting the rectification application without a hearing was improper, especially since the GSTR-1 was already on record. The matter was remanded for reconsideration after issuing a fresh hearing notice via the GST portal, email, and phone.

No adjournment will be granted, and the petitioner must appear on the scheduled date. The Court also noted that the validity of the limitation extension notifications remains pending before the Supreme Court, and any fresh order will be subject to its outcome.

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