2024 (3) TMI 1129 - 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 - demand including penalty - HELD THAT - The observation in the impugned order dated 30.12.2023 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 incomplete, not duly supported by adequate documents and unsatisfactory. He merely held that the reply is not clear and unsatisfactory 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 the reply is incomplete, not duly supported by adequate documents and unsatisfactory, if further any 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 impugned order records that petitioner s reply is not clear, unsatisfactory, incomplete and not duly supported by adequate documents. Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner. Pursuant to the intimation being given, petitioner shall furnish the requisite explanation and documents. Thereafter, the Proper Officer shall re-adjudicate the show cause notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3) of the Act. The matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 30.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication.

Summary

Issues involved: Impugned order under Section 73 of the Central Goods and Services Tax Act, 2017; Proper consideration of petitioner's reply; Satisfactory response by Proper Officer; Opportunity for clarification and furnishing documents; Remittal for re-adjudication.

Impugned Order and Petitioner's Submission: The petitioner challenged an order dated 30.12.2023, which disposed of a Show Cause Notice proposing a demand of Rs 2,72,81,448.00 against the petitioner 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.

Consideration of Reply: The Show Cause Notice addressed excess claim Input Tax Credit and ITC to be reversed on non-business transactions and exempt supplies. The petitioner provided a detailed reply with full disclosures under each heading. However, the impugned order dismissed the reply as incomplete, unsupported by adequate documents, and unsatisfactory without proper justification, indicating a lack of consideration by the Proper Officer.

Proper Officer's Evaluation: The Proper Officer deemed the petitioner's reply unsatisfactory and incomplete without seeking further details or documents. The Court found this evaluation unsustainable as the reply was detailed, and the Proper Officer failed to apply proper scrutiny or request additional information from the petitioner.

Remittal for Re-Adjudication: Due to the improper evaluation of the petitioner's reply, 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, allow a personal hearing, and issue a fresh speaking order within the prescribed period under Section 75(3) of the Act.

Final Disposition: The Court clarified that it did not comment on the merits of the case and reserved all rights and contentions of the parties. The challenge to Notification No. 9 of 2023 regarding the initial time extension was left open, and the petition was disposed of accordingly.