2024 (2) TMI 945 - HC - GST

Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the petitioner and is a cryptic order - under declaration of output tax - excess claim Input Tax Credit, under declaration of ineligible ITC - ITC claim from cancelled dealers - HELD THAT - The impugned order, however, after recording the narration, records that the reply uploaded by the taxpayer is not satisfactory. It merely states that no reply/explanation has been received from the taxpayer despite sufficient opportunities, which indicate that the taxpayer has nothing to say in the matter. Hence, the undersigned, being the Proper Officer, is left with no other option but to create a demand ex parte, in accordance with provisions of CGST/DGST Act, 2017 . The Proper Officer has opined that reply is not clear and unsatisfactory - In case the Proper Officer was of the view that reply is incomplete and further details were required, the same could have been sought by 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 - Petition allowed by way of remand.

Summary

Issues involved: Impugning an order under Section 73 of the Central Goods and Services Tax Act, 2017 for confirming a demand against the petitioner.

Summary of the Judgment:

Issue 1: Consideration of petitioner's reply to show cause notice
The petitioner challenged an order confirming a demand against them, arguing that their detailed reply to the show cause notice was not considered. The Court noted that the show cause notice provided specific details of alleged tax discrepancies, to which the petitioner had responded with full disclosures. However, the impugned order deemed the reply unsatisfactory without giving the petitioner an opportunity to clarify or provide further details. The Court held that the order was unsustainable due to lack of proper consideration of the petitioner's response and remitted the matter for re-adjudication.

Issue 2: Adequate opportunity for defense
The petitioner also contended that they were not given a sufficient opportunity to defend the show cause notice through a hearing. The Court found merit in this argument and set aside the impugned order, directing the Proper Officer to provide the petitioner with necessary details/documents to be furnished within a week. The petitioner was granted one week to submit the required explanation and documents, following which the Proper Officer was instructed to re-adjudicate the show cause notice within two weeks after granting an opportunity for a hearing.

Conclusion
The Court clarified that it did not delve into the merits of the parties' contentions and reserved all rights and contentions. The order was directed to be given dasti under the signatures of the Court Master for further action.