2024 (4) TMI 272 - 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 31.12.2023 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. 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 incomplete, not supported by adequate documents, unclear and unsatisfactory. Proper Officer is directed to intimate to the petitioner if any details/documents, as may be 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 deals with the impugning of an order under Section 73 of the Central Goods and Services Tax Act, 2017, where a demand of Rs. 44,24,400.00 was raised against the Petitioner.

Impugned Show Cause Notice:
The Department raised a demand against the Petitioner under various headings such as declaration of output tax, excess claim of Input Tax Credit (ITC), reversal of ITC on non-business transactions and exempt supplies, declaration of ineligible ITC, and ITC claimed from canceled dealers, return defaulters, and tax non-payers. The Petitioner provided a detailed reply addressing each of these points.

Incomplete Reply and Cryptic Order:
The impugned order considered the reply furnished by the Petitioner as incomplete, unsupported by adequate documents, unclear, and unsatisfactory. It stated that the reply was not acceptable and confirmed the demand of tax and interest without proper justification. The Petitioner argued that their detailed reply was not taken into account, and the order was cryptic.

Error in Tax Liability Calculation:
The Petitioner contended that the Proper Officer erred in not recognizing that the tax liability was paid in advance under Section 12(2)(b) of the Act. Despite the amount being already paid, it was added to the demand. The Petitioner argued that this inclusion was incorrect.

Proper Officer's Lack of Consideration:
The judgment found that the Proper Officer did not properly consider the detailed reply submitted by the Petitioner. The Officer's opinion that the reply was incomplete and unsatisfactory showed a lack of proper assessment. The Petitioner was not given an opportunity to clarify or provide additional details.

Remittal for Re-adjudication:
Due to the deficiencies in the impugned order, the Court set it aside and remitted the matter to the Proper Officer for re-adjudication. The Officer was directed to communicate any required details/documents to the Petitioner for further clarification. A fresh speaking order was to be passed after re-evaluation.

Notification Challenge and Disposal:
The judgment clarified that it did not delve into the merits of the parties' contentions. The challenge to Notification No. 9 of 2023 regarding the initial time extension was left open. The petition was disposed of accordingly.