2024 (4) TMI 270 - HC - GST

Violation of principles of natural justice - cryptic order - excess claim Input Tax Credit - under declaration of ineligible ITC - ITC claimed from cancelled dealers - return defaulters and tax nonpayers - HELD THAT - The observation in the impugned order dated 28.12.2023 is not sustainable for the reasons that the reply dated 23.10.2023 filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not satisfactory nor any substantial documents were submitted by the taxpayer which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the Petitioner. The impugned order records the reply furnished by the Petitioner as not satisfactory nor 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. Petition disposed off.

Summary

Issues Involved:
The judgment involves the challenge to an order passed under Section 73 of the Central Goods and Services Tax Act, 2017, where the petitioner contests the disposal of a Show Cause Notice proposing a significant demand. The key issues revolve around the consideration of the petitioner's detailed reply, the sufficiency of documents submitted, and the adherence to principles of natural justice in the adjudication process.

Detailed Judgment:

Consideration of Petitioner's Reply:
The petitioner had submitted a detailed reply on 23.10.2023 in response to the Show Cause Notice, providing full disclosures under various heads of excess claim Input Tax Credit, under declaration of ineligible ITC, and ITC claimed from specific categories. However, the impugned order dated 28.12.2023 did not adequately consider the petitioner's reply and dismissed it as unsatisfactory without proper evaluation. The court noted that the Proper Officer failed to apply his mind to the detailed submission made by the petitioner, which raises concerns regarding the fairness of the decision-making process.

Adherence to Principles of Natural Justice:
The impugned order raised issues regarding the petitioner's failure to appear for a personal hearing and the alleged lack of satisfactory reply or substantial documents. However, the court observed that if further details were required, the Proper Officer should have specifically requested them from the petitioner. The record did not reflect any opportunity given to the petitioner to clarify or supplement their reply. This lack of communication and opportunity for clarification undermined the principles of natural justice, necessitating a remittance of the matter for re-adjudication.

Remittance for Re-Adjudication:
In light of the deficiencies in the adjudication process, the court set aside the impugned order dated 28.12.2023 and remitted the matter to the Proper Officer for re-adjudication. The Proper Officer was directed to communicate the details/documents required from the petitioner, who would 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 the Act.

Final Disposition and Clarification:
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 concerning the initial extension of time was left open. The petition was disposed of in the above terms, emphasizing the importance of a fair and thorough adjudicative process in matters concerning tax demands and compliance.