2024 (5) TMI 44 - 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 with penalty u/s 73 of the Central Goods and Services Tax Act, 2017 - HELD THAT - The observation in the impugned order dated 28.12.2023 is not sustainable for the reasons that the reply dated 07.11.2023 filed by the Petitioner is a detailed reply 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 is not found to be satisfactory, 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 any further details or documents 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 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, impugned order is set aside and the matter is remitted to the Proper Officer for re-adjudication.

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 a demand including penalty was raised against the Petitioner based on a Show Cause Notice.

Impugned Order Consideration:
The Petitioner challenged an order disposing of a Show Cause Notice proposing a substantial demand against them. The Petitioner contended that their detailed reply was not considered adequately in the impugned order, which was deemed cryptic.

Contentions and Observations:
The Petitioner had submitted a detailed reply to the Show Cause Notice, addressing various issues raised by the Department. However, the impugned order concluded that the reply was unsatisfactory without proper consideration. The Court noted that the Proper Officer failed to evaluate the reply on its merits, indicating a lack of application of mind.

Sustainability of Order:
The Court found the observation in the impugned order unsustainable as the Petitioner's reply was detailed and supported by documents. The Proper Officer's failure to seek further clarification or documents from the Petitioner was also highlighted as a procedural flaw.

Remittance for Re-adjudication:
Consequently, the Court set aside the impugned order and remitted the matter to the Proper Officer for re-adjudication. The Petitioner was directed to file a reply to the Show Cause Notice within 30 days for a fresh adjudication process.

Re-adjudication Process:
The Proper Officer was instructed to re-adjudicate the matter after providing the Petitioner with a personal hearing. A fresh speaking order in accordance with the law was mandated within the prescribed period under Section 75(3) of the Act.

Reservation of Rights:
The Court clarified that it did not delve into the merits of the contentions of either party, preserving all rights and contentions for future proceedings. Additionally, the challenge to Notification No. 9 of 2023 regarding the initial extension of time was left open.

Disposition of Petition:
The petition was disposed of in the aforementioned terms, emphasizing the need for a proper re-adjudication process with due consideration given to the Petitioner's submissions.