2024 (3) TMI 1131 - 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 disposing of Show Cause Notice under Section 73 of the Central Goods and Services Tax Act, 2017 without considering petitioner's detailed reply.

Summary:
The petitioner challenged an order dated 30.12.2023 disposing of a Show Cause Notice dated 23.09.2023 under Section 73 of the CGST Act, 2017, which raised a demand of Rs. 57,11,36,600.00 against the petitioner. The petitioner contended that their detailed reply to the Show Cause Notice was not considered in the impugned order, which was cryptic in nature.

The Show Cause Notice outlined various issues such as declaration of output tax, excess claim Input Tax Credit (ITC), ineligible ITC, and ITC claimed from certain categories. The petitioner provided a detailed reply addressing each issue. However, the impugned order dismissed the reply as unsatisfactory without proper consideration. The Proper Officer deemed the reply inadequate without a thorough assessment, indicating a lack of due diligence.

The Court found the Proper Officer's assessment unsustainable as the petitioner's reply was detailed and warranted a proper review on its merits. The Court noted that the Proper Officer should have sought further clarification or documents if needed, but no such opportunity was provided to the petitioner. Consequently, the Court set aside the impugned order and remitted the matter for re-adjudication by the Proper Officer.

The Court directed the Proper Officer to communicate any specific details or documents required from the petitioner, who must then provide the necessary explanations and materials. Subsequently, the Proper Officer is instructed to re-examine the Show Cause Notice, conduct a personal hearing, and issue a fresh order within the prescribed timeframe under Section 75(3) of the Act.

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