Natural justice in GST rectification requires hearing and reasons before rejecting an assessee's request; original demand challenge remained barred by delay.

A challenge to a GST demand order was not entertained because the petitioner had already replied to the show-cause notice and the delay in approaching HC was not satisfactorily explained. On rectification, the third proviso to Section 161 of the CGST Act requires natural justice where a rectification request is rejected or the rectification adversely affects the assessee; the authority must give a hearing and record reasons showing why no apparent error exists. The mechanical rejection order was therefore set aside, and the matter remitted for fresh consideration by a reasoned order.

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Issues: (i) Whether the challenge to the original GST demand order could be entertained despite delay and the petitioner having filed a reply to the show cause notice; (ii) Whether the rectification order rejecting the rectification application was sustainable without affording hearing and without recording reasons, having regard to the third proviso to Section 161 of the Central Goods and Services Tax Act, 2017.

Issue (i): Whether the challenge to the original GST demand order could be entertained despite delay and the petitioner having filed a reply to the show cause notice.

Analysis: The petition assailed a demand order passed after the petitioner had already submitted a reply to the show cause notice. The delay in approaching the Court was not satisfactorily explained. In these circumstances, the challenge to the original order was not found fit for entertainment.

Conclusion: The challenge to the original demand order was not entertained.

Issue (ii): Whether the rectification order rejecting the rectification application was sustainable without affording hearing and without recording reasons, having regard to the third proviso to Section 161 of the Central Goods and Services Tax Act, 2017.

Analysis: The third proviso to Section 161 mandates compliance with natural justice where rectification adversely affects a person. That safeguard also applies where a rectification application filed by the assessee is rejected without reasons explaining why the alleged error is not apparent on the record. The impugned rectification order was found to be mechanical and unsupported by reasons.

Conclusion: The rectification order was set aside and the matter was remitted for hearing and a fresh reasoned decision.

Final Conclusion: The petitioner did not obtain relief against the original demand order, but succeeded in having the rectification rejection quashed and the application restored for fresh consideration in accordance with natural justice.

Ratio Decidendi: Where rectification under Section 161 of the Central Goods and Services Tax Act, 2017 adversely affects the assessee, or where an assessee's rectification application is rejected, the authority must afford an opportunity of hearing and pass a reasoned order.

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