Section 161 of the CGST Act, 2017— Rectification Order —Personal Hearing -- The petitioner challenged the pre-assessment notice dated 17.09.2021 relating to invocation of Section 16(2)(c) of the Act. The respondent alleged that certain supplies had been made to the petitioner by third parties and the petitioner has averred that the entirety of the amount including tax has been paid to the suppliers. But their registrations have been cancelled and the tax paid by the petitioner has not been remitted by them to the Department. The petitioner preferred an application for rectification of errors under Section 161 of the Act. The court observed that there is a mandate cast upon the petitioner to ensure compliance for availing ITC. An additional factor is that where the tax liability has been met by way of reversal of ITC and similarly recovery is effected from the supplier as well, this would amount to a double benefit to the revenue. The substative liability falls on the supplier and the protective liability upon the purchaser. A mechanism must be put in place to address this situation. The petitioner has chosen to seek rectification of order-in-original but there has been no opportunity granted to the petitioner prior to the passing of impugned order dated 20.01.2023.

Held that:- The Hon’ble High Court set aside the Order dated 20.01.2023 and directed that the petitioner shall be heard by issue of notice and orders passed on the Section 161 application within a period of four weeks.