Background.  The petitioner had acquired a wind electric generator park of twenty windmills by slump sale in 2015 and sold that business to Bilal Match Works under a sale of business agreement dated 14.06.2019 for a consideration of Rs. 9,50,00,000. Relying on the figure of Rs. 10,34,32,205 appearing in the petitioner’s sixth annual report for FY 2019-20, being cost of machinery plus profit on sale, the assessment order dated 26.11.2021 confirmed tax of Rs. 93,08,898 each under CGST and SGST together with penalty at one hundred per cent under Section 122(1).Observations of the Court.  The Court pointed to the department’s own notice dated 21.10.2021, which had recorded that where a person ceases to be a taxable person, goods forming part of the assets of the business are deemed to be supplied immediately before he ceases to be a taxable person unless the business is transferred as a going concern to another person, in terms of entry 4(c)(i) of Schedule II, and which had categorically admitted, on the strength of the agreement filed, that the consideration of Rs. 9,50,00,000 was not exigible to tax, proposing to bring only the differential of Rs. 84,32,205 to tax.The impugned order having nonetheless confirmed the demand on the entire Rs. 10,34,32,205 taken from the annual report, the Court held the demand to be unsustainable, arbitrary and contrary to that notice.Final verdict.  The writ petition was allowed, the impugned order was set aside and the matter was remitted to the respondent to pass a fresh order on merits and in accordance with law, after hearing the petitioner, within eight weeks from receipt of the order.

BackgroundAn Assessment Order dated 20th December 2023 was passed against the Petitioner under Section 73 of the TNGST Act 2017. Within the stipulated time, the Petitioner filed a Rectification Application under Section 161 seeking rectification of errors apparent on the face of the record in the Assessment Order. The first Respondent, without assigning any reasons as to why the Assessment Order did not suffer from any apparent error and without giving any opportunity of hearing, rejected the Rectification Application vide order dated 02nd February 2024. The Rectification Order merely extracted tables of figures indicating the amounts the petitioner was liable to pay — without any reasoning or analysis. The Petitioner challenged both the Assessment Order and the Rectification Order before the High Court under Article 226 of the Constitution.Relevant Facts & Rival ContentionsThe Petitioner contended that the Rectification Application was rejected without hearing and without assigning reasons as to how the Assessment Order was free from apparent errors — a clear violation of the third proviso to Section 161. The Revenue, however, vehemently argued a narrow construction — that no reasons need to be given when rejecting a rectification application, as the authority only needs to check for apparent error and can reject without reasons if none exists. More importantly, the Revenue contended that the hearing requirement under the third proviso to Section 161 arises ONLY when the Assessing Officer initiates rectification suo motu and the resulting order is detrimental to the assessee — and NOT when the rectification application had been made at the instance of the assessee himself. The Revenue further argued that the petitioner had not even indicated any apparent error in his application, and therefore no interference was warranted.Third Proviso to Section 161 — The Pivotal Statutory Text:"Provided also that where such rectification adversely affects any person, the principles of natural justice shall be followed by the authority carrying out such rectification."Revenue's ArgumentProviso applies only to suo motu rectification adverse to assessee — NOT to rejection of assessee-initiated applicationCourt's RulingProviso applies to BOTH situations — even rejection of assessee-initiated application requires hearing and reasons Court Observations (Verbatim)"A perusal of the order does not also indicate that there had been no error apparent on the record to reject the rectification. He had only extracted the tables indicating the figures which the petitioner is liable to pay. There is also no reasonings as to why there is no error apparent on the face of the record. For this reason, the impugned order dated 02.02.2024 is liable to be set aside."— Para 8 (on the mechanical nature of the Rectification Order)"Even though, streneous efforts had been made by the learned Additional Government Pleader that no personal hearing need to be given when an application had been made at the instance of the assesse, I am not in agreementd with the learned Additional Government Pleader. The Provisio indicates that when an order is being made adverse to the assessee, then he should be given an opportunity of being heard when the rectification adversely affects any person. The principles of natural justice had been inbuilt by way of the 3rd Proviso to Section 161."— Para 8 (rejecting Revenue's narrow construction of the third proviso)"If pursuant to a Rectification Application, if a rectification is made and if it adversely affects the assesse, Proviso 3 contemplates an opportunity of hearing to be given. However, when an Rectification Application is made at the instance of assessee and the rectification is being sought to be rejected without considering the reasons for rectification or by giving reasons as to why such rectification could not be entertained. It is also imperative that the assessee to be put on notice."— Para 8 (expanding the scope of natural justice under Section 161 — the core ratio)"I am inclined to hold that the order of rectification passed by the first respondent dated 02.02.2024 is contrary to the provisions of Section 161 and in that aspect, the same alone is set aside and the Rectification Application filed by the petitioner shall be taken afresh by the first respondent and after giving an opportunity to the petitioner, the first respondent shall pass appropriate orders and in accordance with law."— Para 9 (operative conclusion and direction)Final VerdictWrit Petition allowed. Rectification Order dated 02.02.2024 set aside as contrary to the provisions of Section 161 of the CGST/TNGST Act. Rectification Application to be taken afresh; first Respondent directed to grant opportunity of hearing to the Petitioner and then pass a reasoned order in accordance with law. All further remedies of the Petitioner preserved. No order as to costs.

BACKGROUNDA batch of 27 Writ Petitions was filed by various small traders and businesspersons whose GST registrations were cancelled under Section 29(2)(c) of the CGST/TNGST Acts for non-filing of returns for a continuous period of six months. Show Cause Notices in prescribed form were issued to all petitioners and cancellation orders were passed after personal hearing opportunities. The cancellation orders ranged from the year 2018 to 2019. Some petitioners directly challenged the cancellation orders, while others challenged orders of Appellate Commissioners rejecting their appeals as time-barred, and a few challenged rejection of revocation applications. The Government had provided multiple amnesty opportunities through Order No.01/2020-Central Tax dated 25.06.2020 (for cancellations up to 12.06.2020) and Notification No.34/2021-Central Tax dated 29.08.2021 (extending deadline to 30.09.2021), but none of the petitioners availed these in time. The Appellate Commissioners correctly rejected all belated appeals as beyond the condonable period under Section 107 of the respective GST Acts. FACTSAll the petitioners had failed to file their GST returns for a continuous period of six months, resulting in cancellation of their registrations. After cancellation, they neither filed applications for revocation under Section 30 of the Act within 30 days, nor did they avail the extended amnesty opportunities granted by the Government on the recommendations of the GST Council to revive their registrations. When some of them filed appeals before Appellate Commissioners under Section 107 of the CGST/TNGST Acts, those appeals were rejected as beyond the condonable period of limitation — the delays ranging from 11 months to over 2 years. The Appellate Commissioners, being statutory authorities, had no jurisdiction to condone delay beyond the maximum period prescribed under Section 107. Several petitioners also pointed to the Supreme Court's COVID-19 limitation extension orders, CBIC Circular No.157/13/2021-GST dated 20.07.2021, Circular No.158/14/2021-GST dated 06.09.2021, and Notification No.34/2021-Central Tax dated 29.08.2021. One petitioner specifically raised an issue about the GST portal architecture not permitting filing of revocation applications despite dues being paid. The Court noted that while the Appellate Authorities rightly rejected the petitions under the statute, there was an overwhelming case for restoring the registrations in exercise of the extraordinary writ jurisdiction under Article 226. COURT OBSERVATIONS (Verbatim)"The law on the limitation has been well settled by the Hon'ble Supreme Court. In this connection, a reference is invited to the decision of the Hon'ble Supreme Court in M/s. Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur and Others, (2008) 3 SCC 70, wherein, it has been held that statutory appeal filed beyond the statutory period for condonation of delay under Section 35 of the Central Excise Act, 1944 cannot be condoned. This position of law applies to the facts of these cases.""As original or as appellate authority exercising power under the respective enactments, quasi judicial officers were bound by the provisions of the Act and the limitation under it, they have acted in accordance with law. They cannot look beyond the limitations prescribed under provisions of the Act. Therefore, no fault can be attributed to their action.""the provisions of the Goods and Services Tax Act, 2017 cannot be interpreted in such a manner, so as to debar an assessee, either from obtaining registration or reviving the lapsed/cancelled registration as such an interpretation would be not only contrary to the Article 19(1)(g) of the Constitution of India but also in violation of Article 14 and Article 21 of the Constitution of India.""In my view, no useful purpose will be served by keeping these petitioners out of the bounds of GST regime under the respective GST enactments other than to allow further leakage of the revenue and to isolate these petitioners from the main stream contrary to the objects of the respective GST enactments.""The purpose of GST registration is only to ensure just tax gets collected on supplies of goods or service or both and is paid to the exchequer. Keeping these petitioners outside the bounds of the GST regime is a self defeating move as no tax will get paid on the supplies of these petitioners.""The provisions of the GST enactments cannot be interpreted so as to deny the right to carry on Trade and Commerce to a citizen and subjects. The constitutional guarantee is unconditional and unequivocal and must be enforced regardless of the defect in the scheme of the GST enactments. The right to carry on trade or profession also cannot be curtailed. Only reasonable restriction can be imposed. To deny such rights would militate against their rights under Article 14, read with Article 19(1)(g) and Article 21 of the Constitution of India.""This is a fit case for exercising the power under Article 226 of the Constitution of India in favour of the petitioners by quashing the impugned orders and to grant consequential relief to the petitioners. By doing so, the Court is effectuating the object under the GST enactment of levying and collecting just tax from every assessee who either supplies goods or service. Legitimate Trade and Commerce by every supplier should be allowed to be carried on subject to payment of tax and statutory compliance.""These petitioners deserve a chance and therefore should be allowed to revive their registration so that they can proceed to regularize the defaults."  FINAL VERDICTAll 27 Writ Petitions were allowed subject to conditions. The petitioners were directed to file all pending returns and pay the defaulted tax, interest, fine and fee within 45 days from receipt of the order, without adjusting from ITC. On compliance, the GST registrations shall stand revived forthwith. The respondents were directed to instruct GSTN to make necessary changes in the portal architecture within 30 days to enable filings. ITC, if any, to be utilized only after scrutiny and approval by competent authorities.👍 IN FAVOUR OF ASSESSEE CASES REFERRED BY THE COURT#Case NameCitation1M/s. Singh Enterprises vs. Commissioner of Central Excise, Jamshedpur & Others(2008) 3 SCC 70 (Supreme Court)2P.R. Mani Electronics vs. Union of India and Others2020 SCC OnLine Mad 8053 (Madras HC, Division Bench)3Tvl. Sunpenta Mining Service Pvt. Ltd. vs. Asst. Commissioner (ST), SalemW.P.Nos.20083 & 20086 of 2021 dated 22.09.2021 (Madras HC)4Suresh Trading Corporation vs. Asst. Commissioner (Circle) of SGST, Coimbatore IIW.P.No.21109 of 2021 dated 01.10.2021 (Madras HC)5Mafatlal Industries Ltd. vs. Union of India(1997) 5 SCC 536 (Supreme Court)6In Re: Cognizance for Extension of Limitation2021 SCC OnLine SC 947 (Supreme Court) — M.A. No.665/2021 in SMW(C) No.3/2020