2024 (3) TMI 630 - HC - GST

Validity of Demand order including penalty - Show Cause Notice issued u/s 61 of the Act, with regard to discrepancies - mismatch of Input Tax Credit ITC - HELD THAT - Perusal of the Show Cause Notice shows that the Department has given separate heading of excess claim Input Tax Credit ITC . To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving full disclosures under the said head. The observation in the impugned order dated 29.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply. Proper officer had to at least consider the reply on merits and then form an opinion whether the reply was not satisfactory. He merely held that the reply is not satisfactory which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. Further, if the Proper Officer was of the view that reply was not satisfactory and further details were required, the same could have been specifically 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. Thus, the order cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 29.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication. Petition is disposed of in the above terms.

Summary

Issues involved:
The judgment involves the challenge to an order raising a demand against the petitioner under Section 73 of the Central Goods and Services Tax Act, 2017, based on a Show Cause Notice regarding discrepancies in Input Tax Credit (ITC) without providing a personal hearing to the petitioner.

Details of the Judgment:

Issue 1: Lack of Personal Hearing in Show Cause Notice
The petitioner challenges an order raising a demand of Rs. 4,70,512.00, contending that a previous Show Cause Notice did not provide a personal hearing opportunity despite discrepancies in ITC being highlighted. The petitioner submitted a detailed reply explaining the excess ITC claim but was not given a chance for a personal hearing.

Issue 2: Inadequate Consideration of Petitioner's Reply
The petitioner filed a detailed reply to a subsequent Show Cause Notice, but the impugned order did not consider this reply adequately. The order deemed the reply unsatisfactory without proper examination, leading the Court to conclude that the Proper Officer did not apply his mind to the petitioner's submission.

Issue 3: Lack of Opportunity for Further Clarification
The Court found that the Proper Officer did not seek further details or clarification from the petitioner if the reply was deemed unsatisfactory. The absence of a specific opportunity for the petitioner to provide additional information rendered the order unsustainable.

Conclusion:
The Court set aside the impugned order and remitted the matter to the Proper Officer for re-adjudication. The Proper Officer was directed to request necessary details/documents from the petitioner, who must then furnish explanations and documents. A fresh speaking order with a personal hearing opportunity should be passed within the prescribed period. The Court clarified that it did not assess the merits of the parties' contentions, preserving their rights and contentions. The petition was disposed of accordingly.