Facts The issue before the Court was whether purchasing dealers who paid tax to registered selling dealers are entitled to Input Tax Credit even if the selling dealers failed to deposit the tax with the Government. The selling dealers were registered at the time of transactions but later defaulted and their registrations were cancelled. The Delhi High Court held that the purchasing dealers were bona fide and entitled to ITC. The Revenue challenged this decision before the Supreme Court. Court Decision:The Supreme Court dismissed the appeals and upheld the High Court’s decision. It held that where transactions and invoices are genuine and the selling dealer was registered at the time of transaction, ITC cannot be denied to bona fide purchasing dealers. The Court found no reason to interfere with the grant of ITC after due verification. Cases Referred by Court:•    On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi •    Commissioner of Trade and Taxes v. Arise India Ltd.  

Case Facts:The petitioner challenged a bank attachment notice issued for recovery of tax dues of a company in which he was a director. An assessment order had been passed against the company for the tax period 2018–19. The petitioner claimed resignation from the company and sought immunity under Section 89(1), submitting a representation to authorities. The company had separately challenged the assessment order, which was pending before the Court. Court Decision:The Court held that the issue of petitioner’s liability under Section 89 requires adjudication. It directed the authorities to treat the impugned attachment notice as a show cause notice and decide the matter after giving opportunity to the petitioner. The petitioner was directed to submit a detailed representation within 30 days, and the authority to pass orders within two months thereafter. The bank attachment was ordered to be lifted pending such adjudication, subject to conditions. 

Facts :The petitioner was subjected to an assessment order dated 02.08.2025 raising a demand of over ₹244 crores. Prior to and immediately after the assessment, the authorities provisionally attached bank accounts and issued recovery notice dated 19.08.2025, resulting in recovery of ₹170 crores. Due to attachment and recovery, the petitioner could not file appeal as it was unable to arrange the statutory pre-deposit. The petitioner challenged the recovery, attachment, and conditions imposed by the Department.Court Decision:The Court held that once the statutory pre-deposit requirement under Section 107(6) is satisfied, a deemed stay of recovery operates and further coercive steps are not permissible. It directed that the amount already recovered be adjusted towards the 10% pre-deposit and the balance be refunded upon furnishing undertaking by the petitioner. The Court further held that restrictions on use of funds can be imposed only to safeguard revenue interests, and directed the petitioner to maintain specified balance and retain sale proceeds till disposal of appeal. The writ petition was disposed of with directions for refund subject to undertakings and adjustment of pre-deposit. 

BackgroundA Show Cause Notice was issued on 25th September 2023 for the tax period July 2017 to March 2018, with no date for personal hearing fixed therein. The Petitioner filed its reply on 25th October 2023 with supporting documents. Thereafter, without affording a personal hearing, an impugned order dated 30th December 2023 was passed raising a demand of Rs. 15,39,686/-. The Petitioner, unable to challenge the order immediately due to a dispute with his GST Consultant (who had not informed the Petitioner of the order), filed a Rectification Application on 27th March 2024 under Section 161 of the Act. The Rectification Application was rejected on 28th June 2024 by a one-line mechanical order holding the application to be "unsatisfactory" without providing any reasons as to why no error was apparent on the face of the record. The Petitioner then filed the present Writ Petition challenging both the original demand order dated 30th December 2023 and the Rectification Order dated 28th June 2024.Relevant FactsThe Petitioner raised two distinct challenges. First, regarding the original demand order, the Petitioner contended it was passed without affording a personal hearing, as the SCN had not fixed any hearing date. The Revenue countered that the Petitioner had filed a reply, had an opportunity of hearing and an efficacious appeal remedy. The Court required the Petitioner to explain the delay through an additional affidavit — the explanation offered was a dispute with the GST Consultant which resulted in unawareness of the impugned order. Second, regarding the Rectification Order, the Petitioner contended that it was dismissed mechanically — without applying mind, without recording any reason as to why no error was apparent on the face of the record, and without affording the Petitioner a hearing before rejecting the application adversely. The Rectification Order merely stated: "I have gone through rectification application and observed that no error/mistake is apparent on record as such I reject the application for rectification" — without any elaboration or reasoning whatsoever.Third Proviso to Section 161 — Key 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."Court Observations (Verbatim)"Considering the above as also the facts of the case, in the opinion of the Court no ground for entertaining the challenge against the impugned order has been made out as the Petitioner had an opportunity of filing a reply which it did. Further the delay is not sufficiently explained. The order is of December 2023 and the writ petition has been filed even after the limitation period for filing the appeal has lapsed."— Para 6 (on the original demand order — challenge rejected)"The above position of law is clear to the effect that it is necessary to afford a hearing to the assessee when the rectification order adversely affects the said assessee. The said position would also prevail when the rectification application has been preferred by the assessee and the same is being rejected without providing reasons for non-consideration/insufficiency of the grounds raised by the said assessee. This practice, in our view, would be in line with the intent of the third proviso to Section 161 of the Act which stipulates compliance with the principle of natural justice to protect the interest of the assessees."— Para 9 (Court's own finding on Section 161)"It is clear from a reading of the said order, that the same is a mechanical order passed without providing reasons as to why there is no error apparent on the face of the record."— Para 11 (on the Rectification Order dated 28th June 2024)From Suriya Cement Agency v. State Tax Officer (Madras HC, W.P.(MD) No. 7338 of 2024 — relied upon via HVR Solar):"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. 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 of Suriya Cement Agency, as quoted in Para 8 of the present judgmentFinal VerdictOriginal Order — Against AssesseeChallenge to demand order dated 30.12.2023 refused. Delay not sufficiently explained; writ filed after appeal limitation period lapsed; petitioner had filed a reply.Rectification Order — For AssesseeRectification Order dated 28.06.2024 set aside as mechanical and without reasons. Fresh hearing directed; reasoned order to be passed thereafter.Appellate remedy of the Petitioner after the fresh rectification order is expressly kept open. Petition disposed of accordingly.Cases Referred by CourtHVR Solar Private Limited v. Sales Tax Officer Class II Avato Ward 67 & Anr.Relied upon2025:DHC:2476-DB — Delhi High Court (Division Bench) — Considered the third proviso to Section 161 of the CGST Act; basis for the court's analysis in the present caseSuriya Cement Agency v. State Tax OfficerRelied uponW.P. (MD) No. 7338 of 2024 — Madras High Court — Decided on 21 November 2024 — Held that rejection of a rectification application without hearing the assessee and without recording reasons is impermissible under the third proviso to Section 161; assessee must be put on notice even when the application is filed at the instance of the assessee and is being rejected 

Facts:A search was conducted on 03.08.2021 at the premises of the petitioner, a metal scrap dealer. Investigation by DGGI revealed that the petitioner had allegedly availed fraudulent ITC from several non-existent supplier firms and passed on such ITC through fake invoices. A show cause notice dated 29.05.2023 was issued for the period 2017-18 to 2021-22 proposing recovery of ₹83,76,32,528/- under Section 74 along with interest and penalty, which was confirmed by the adjudication order dated 23.01.2025.Court Decision:The Court held that the impugned adjudication order was a detailed order passed after granting multiple opportunities of hearing and after considering the replies filed by the petitioner. The contention that the replies were not considered was rejected.The Court further held that issuance of a consolidated show cause notice for multiple financial years under Section 74 of the CGST Act is permissible as the provisions use the expressions “for any period” and “for such periods”. In cases involving fraudulent availment or utilisation of ITC, transactions across several years may have to be examined together to establish the pattern of fraud.The Court also held that denial of cross-examination in show cause notice proceedings does not automatically vitiate the adjudication, as the right of cross-examination is not an unfettered right and depends on the facts of each case.Since the adjudication order was appealable under Section 107 of the CGST Act and involved disputed questions of fact, the Court declined to exercise writ jurisdiction and relegated the petitioner to the statutory appellate remedy.Cases Referred by Court:·         Vallabh Textile Through Its Authorized Representative v. Additional/Joint Commissioner, CGST Delhi East Commissionerate & Ors.·         Sushil Aggarwal v. Principal Commissioner of Customs·         Telestar Travels Pvt. Ltd. v. Special Director of Enforcement, (2013) 9 SCC 549·         Shamshad Ahmad v. Tilak Raj Bajaj, (2008) 9 SCC 1·         HIM Logistics Pvt. Ltd. v. Principal Commissioner of Customs, 2016 SCC OnLine Del 1236·         Flevel International v. Central Excise, 2015 SCC OnLine Del 12173