Rectification under GST and ITC reconciliation rejected without hearing; order set aside and remitted for fresh adjudication

Rectification under the GST regime was challenged on grounds that an application to correct ITC reconciliation was rejected without affording opportunity to be heard and without adequate consideration of documents said to be uploaded on the GST portal. The court found the rejecting order lacked reasons for disregarding the submitted reconciliation, invoices and credit notes and did not show personal hearing; accordingly the rejection was quashed and the matter remitted. The authority is directed to consider the rectification application afresh, verify portal records and allow the applicant an opportunity to appear and produce supporting documents within a specified period.

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Issues: Whether the order rejecting the application for rectification under Section 161 of the GST Act (challenging an adjudication order passed under Section 73) was legally sustainable where the rectification application and reconciliation/portal records were not considered and no opportunity of hearing was afforded.

Analysis: The legal framework involves Section 161 (rectification of orders), Section 73 (determination of tax not paid), and Section 65 (audit) of the GST Act, together with the principles requiring consideration of evidentiary material placed on the portal and the requirement to afford an opportunity of hearing before rejecting a rectification application. The rectification application asserted that reconciliation statements and supporting purchase/credit-note data had been uploaded and submitted; the impugned rejection does not disclose reasons for disregarding those records nor does it record that a hearing was afforded. Reliance on administrative guidance concerning treatment of commercial/financial credit notes (Circular No.105/24/2019-GST) is relevant to whether ITC reversal was necessitated. Where an authority rejects a rectification application without considering asserted documentary records available on the portal and without affording an opportunity to be heard, the rejection suffers from legal infirmity and error apparent on the face of record, warranting remand for fresh, reasoned consideration in accordance with statutory provisions and principles of natural justice.

Conclusion: The rejection of the rectification application is set aside and the matter is remanded to the adjudicating authority to consider the rectification application afresh, including the reconciliation statements and portal records, and to afford the applicant an opportunity of hearing; the authority shall pass a reasoned order under Section 161 after such consideration.

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