2024 (4) TMI 946 - HC - GST

Validity of Orders passed u/s 73 - excess claim of Input Tax Credit ITC - Inadequate Consideration of Replies - Levy of penalty - No opportunity of Personal Hearing - HELD THAT - Perusal of the Show Cause Notices dated 05.09.2023 and 29.09.2023 shows that the Department has issued both the notices on similar grounds and headings i.e., excess claim Input Tax Credit ITC ; Scrutiny of ITC availed and scrutiny of ITC reversals, to the said Show Cause Notices, detailed replies were furnished by the petitioner giving disclosures under each of the heads. Pursuant to the said Show Cause Notices, Petitioner was issued reminders dated 21.12.2023 thereafter Petitioner filed replies dated 26.12.2023 to the said reminders. The observation in the impugned orders dated 31.12.2023 is not sustainable for the reasons that the replies dated 14.12.2023 and 03.10.2023 filed by the Petitioner are detailed replies with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply dated 03.10.2023 is unsatisfactory and reply dated 14.12.2023 is not supported with proper calculations/reconciliation and relevant documents, which ex-facie shows that the Proper Officer has not applied his mind to the replies submitted by the petitioner. Further, if the Proper Officer was of the view that any 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. Thus, impugned orders dated 31.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, impugned orders dated 31.12.2023 are set aside and the matter is remitted to the Proper Officer for re-adjudication. Petition is disposed of in the above terms.

Summary

Issues involved:
The issues involved in this case include the disposal of Show Cause Notices proposing demands under Section 73 of the Central Goods and Services Tax Act, 2017, and the subsequent creation of demands including penalties against the Petitioner without proper consideration of the replies submitted.

Impugned Show Cause Notices:
The Petitioner challenged two orders dated 31.12.2023 based on Show Cause Notices dated 05.09.2023 and 29.09.2023, which proposed demands of Rs. 42,74,423.00 and Rs. 33,32,254.00 respectively. The Petitioner argued that detailed replies were submitted but not considered in the orders, which were passed under Section 73 of the Act.

Contention of Petitioner:
The Petitioner's counsel highlighted that detailed replies were filed on 14.12.2023 and 03.10.2023, but the impugned orders did not take these submissions into account and were deemed cryptic.

Scrutiny of ITC:
The Department issued Show Cause Notices on grounds of excess claim of Input Tax Credit (ITC) and scrutiny of ITC availed and reversals. The Petitioner provided detailed disclosures under each head in response to the notices and subsequent reminders.

Unsatisfactory Replies:
The impugned orders found the Petitioner's replies unsatisfactory, citing lack of proper support with relevant documents, calculations, and reconciliation for the excess claim of ITC. The Proper Officer concluded that penalties were mandatory due to the unsatisfactory replies.

Judicial Review:
The Court held that the Proper Officer did not adequately consider the detailed replies with supporting documents submitted by the Petitioner. It was observed that the Officer did not apply his mind to the submissions, leading to unsustainable conclusions in the impugned orders.

Remittal for Re-adjudication:
The Court set aside the impugned orders dated 31.12.2023 and remitted the matter to the Proper Officer for re-adjudication. The Petitioner was directed to file replies to the Show Cause Notices within 30 days for a fresh speaking order after a personal hearing.

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