The High Court of Orissa in the case of Aruni Stone Crusher v. Superintendent, Central GST and Central Excise (2025) 35 Centax 284 (Ori.), decided on 25.09.2025, examined whether a rectification application filed under Section 161 of the Goods and Services Tax (hereinafter referred to as “GST”) Act, 2017 must be considered before continuing with a pending show cause notice under Section 74.
The Court held that when a taxpayer seeks rectification of an error apparent on record, the concerned authority must first consider and decide such application before proceeding with the adjudication of a demand-cum-show cause notice. The judgment thus reinforces the principle that procedural fairness and rectification of errors are essential preconditions to a valid adjudication under the GST law.
FACTS
Aruni Stone Crusher (hereinafter referred to as “the Petitioner”) was engaged in mining operations. The Petitioner was served with a demand cum show cause notice (hereinafter referred to as “SCN”) on 26.06.2025 by the Assistant Commissioner, Central GST and Central Excise, Jaipur Division (hereinafter referred to as “the Respondent”). The SCN was to pay GST on mineral extraction royalty on the tax years 2018 -19 to 2022-23 under Section 74 of the Central Goods and Services Tax Act, 2017 and the Odisha Goods and Services Tax Act, 2017.
The Petitioner filed an application under Section 161 of the GST Act on 26.08.2025 seeking rectification of the mistake in the SCN and argued that the calculation of the tax liability was incorrect and, upon correction, the demand would fall significantly or the demand would be in nil. Nonetheless, the Respondent had given personal hearing notices to the Petitioner dated 02.09.2025 and 19.09.2025 for adjudication of the SCN without reference to the pending rectification application.
The Petitioner being aggrieved by this approached the High Court of Orissa at Cuttack seeking a direction to the authorities to first decide the rectification application before proceeding on the SCN.
ISSUES BEFORE THE HIGH COURT
- Whether the authority was required to consider the rectification application under Section 161 before proceeding with the hearing on the show cause notice under Section 74 of the GST Act?
- Whether the issuance of hearing notices without deciding the rectification application was justified in law?
CONTENTIONS OF THE PARTIES
The Petitioner submitted that the rectification application was duly filed and acknowledged by the Respondent. It was further contended that the said application, if considered and allowed, could drastically reduce or nullify the demand raised in the impugned SCN.
The Petitioner argued that the proceeding with the hearing on the SCN without addressing the rectification plea would render the adjudication process arbitrary and prejudicial to the Petitioner.
Emphasising the mandatory nature of Section 161 of the CGST Act, the petitioner asserted that any “error apparent on the face of the record” must be rectified by the authority concerned prior to undertaking further substantive proceedings.
The Respondent on the contrary, submitted that the notices of hearing were procedural and the application of rectification could be taken into account during the hearing itself.
The Respondent further submitted that since the Petitioner did not respond to the earlier notice dated 21.05.2025, the authority was within its rights to move forward with the SCN process. Therefore, no illegality could be attributed to the Respondent’s actions.
DECISION AND FINDINGS
The High Court of Orissa noted that the Respondent indeed received the Petitioner’s rectification application dated 26.08.2025. the hearing intimations did not indicate that this application would be considered along with the SCN, nor was there any mention of its maintainability being concluded.
The Court emphasized that it would be prudent and in the interest of procedural justice for the authority to first consider the maintainability and merits of the rectification request before continuing with the SCN adjudication.
The Court directed the Respondent to first consider the maintainability of the rectification application under Section 161. If found maintainable, the grievance shall be examined on merits within two weeks from receipt of the Court’s order. Only after such consideration, the authority may proceed further on the SCN dated 26.06.2025. Thus, the writ petition was disposed of.
AMLEGALS REMARKS
The case highlights the significance of procedural fairness and higher hierarchy of statutory remedies under the GST regime. The GST Act is a legal statute that offers a method of remedying clerical or superficial mistakes in any decision, notice, or order made by tax authorities in section 161. The Court ensured that procedural justice comes first before adjudicative action by insisting that rectification application comes before the show cause proceedings. Legally, the ruling confirms that administrative authorities are not allowed to ignore an outstanding rectification request and at the same time take action to enforce it. This makes certain that taxpayers are not forced to undergo unwarranted proceedings on which a correction may solve the dispute.
This judgment is used as a procedural protection of assesses in the GST framework in legal opinion. It confirms that where a correction of mistakes is duly and bona fide requested, such rectification must be considered and decided upon before the adjudication proceedings can be legitimately pursued. The ruling provides a balance between revenue considerations and the fair process of the taxpayer.
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