2024 (3) TMI 972 - HC - VAT and Sales Tax

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 - The observation in the impugned order dated 23.12.2023 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 is not clear and unsatisfactory. He merely held that the reply is not clear and satisfactory which ex-facie shows that the 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 unsatisfactory 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. 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 23.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication - the impugned order records that petitioner s reply is not satisfactory. The Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner. Petition disposed off.

Summary

Issues involved: Impugned order under Section 73 of the Central Goods and Services Tax Act, 2017 not considering detailed reply, sustainability of the observation in the order, lack of opportunity to clarify reply, remittance of the matter for re-adjudication, direction to furnish requisite explanation and documents, challenge to Notification No. 9 of 2023.

Summary:

The petitioner challenged an order dated 23.12.2023, which disposed of a Show Cause Notice proposing a demand of Rs. 7,95,34,514.00 under Section 73 of the CGST Act. The petitioner contended that their detailed reply to the Show Cause Notice was not considered in the impugned order, which was deemed cryptic.

The Department had raised concerns regarding excess claim Input Tax Credit, under declaration of ineligible ITC, and ITC claim from cancelled dealers, return defaulters, and tax non-payers. Despite the petitioner furnishing a detailed reply addressing each concern, the impugned order deemed the reply unsatisfactory without proper justification.

The Court found the observation in the impugned order unsustainable as the Proper Officer failed to consider the detailed reply on its merits. Moreover, the petitioner was not given an opportunity to clarify or provide further details, rendering the order invalid. Consequently, the matter was remitted to the Proper Officer for re-adjudication.

The Court directed the Proper Officer to specify the details/documents required from the petitioner, who must then furnish the necessary explanation and documents. Subsequently, the Proper Officer was instructed to re-adjudicate the Show Cause Notice, provide a personal hearing opportunity, and issue a fresh speaking order within the prescribed period under Section 75(3) of the Act.

The Court clarified that it did not delve into the merits of the parties' contentions and reserved all rights and contentions. Additionally, the challenge to Notification No. 9 of 2023 regarding the initial time extension was left open, and the petition was disposed of accordingly.