2024 (2) TMI 801 - HC - GST

Excess claim of Input Tax Credit - Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the petitioner and is a cryptic order - HELD THAT - A perusal of the show cause notice shows that the Department has given specific details of alleged under declaration of output tax, excess claim Input Tax Credit ITC , under declaration of ineligible ITC and ITC claim from cancelled dealers, return defaulters and tax non-payers. To the said show cause notice, a detailed reply was furnished by the petitioner giving full disclosures under each of the heads. In case the Proper Officer was of the view that reply is incomplete and further details were required, the same could have been sought from the petitioner, however, the record does not reflect that any such opportunity was given to the petitioner to clarify its reply or furnish further documents/details - Further petitioner was not provided with an adequate opportunity to defend the show cause notice by way of a hearing. The order cannot be sustained and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order and show cause notice is set aside. The matter is remitted to the Proper Officer for re-adjudication.

Summary

Issues involved: Impugning an order under Section 73 of the Central Goods and Services Tax Act, 2017 due to lack of opportunity for defense and incomplete reply.

Summary:

Issue 1: Lack of Sufficient Opportunity for Defense
The petitioner challenged an order confirming a demand against them, stating that the notice fixing the hearing date was issued on a holiday, leaving insufficient time to prepare. The petitioner had submitted a detailed reply to the show cause notice, but the impugned order was passed without adequate reasoning, merely stating the reply was not clear and satisfactory. The Court noted that the Department provided specific details in the show cause notice, and the petitioner had responded comprehensively. However, the impugned order deemed the reply incomplete without giving the petitioner an opportunity to clarify or provide further details.

Issue 2: Inadequate Opportunity for Hearing
The Court observed that the notice for the hearing was issued on short notice, just before a gazetted holiday, without granting the petitioner adequate time to defend against the show cause notice. It was held that the petitioner had not been given a fair opportunity to present their case, as the Proper Officer did not seek additional information before passing the impugned order.

Judgment:
The Court set aside the impugned order and show cause notice, remitting the matter to the Proper Officer for re-adjudication. The Proper Officer was directed to provide the petitioner with specific details/documents required within a week, and the petitioner was given a week to furnish the necessary explanation and documents. Subsequently, the Proper Officer was instructed to re-adjudicate the show cause notice within two weeks after granting an opportunity for a hearing. The Court clarified that it did not comment on the merits of the case, preserving the rights and contentions of both parties.