2024 (5) TMI 1381 - HC - GST

Violation of principles of natural justice - the impugned order does not take into consideration the replies submitted by the Petitioner - cryptic order - demand including penalty u/s 73 of CGST Act - HELD THAT - The observation in the impugned order dated 29.04.2024 is not sustainable for the reasons that the replies dated 17.01.2024 and 27.02.2024 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 is not properly replied/filed without any justification 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 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 dated 29.04.2024 cannot be sustained and is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication - Petition disposed off by way of remand.

Summary

Issues involved: Impugning an Order-in-Original u/s 73 of the Central Goods and Services Tax Act, 2017 based on a Show Cause Notice, alleging improper consideration of replies and mechanical application of Special Audit Report.

Summary:
The petitioner challenged an Order-in-Original dated 29.04.2024, which disposed of a Show Cause Notice dated 24.12.2023 proposing a demand of Rs. 7,02,71,577.00 u/s 73 of the CGST Act for FY 2018-19. The petitioner contended that their detailed replies were not considered, and the order was cryptic. It was argued that the Show Cause Notice lacked proper application of mind, as the Special Audit Report findings were mechanically included without detailed reasons. The petitioner provided detailed responses to the Notice, addressing various audit findings, but the impugned order dismissed the replies as not properly filed without adequate justification. The court found the order unsustainable, noting that the Proper Officer failed to consider the replies on merits and did not provide an opportunity for clarification or additional details. Consequently, the impugned order was set aside, and the Show Cause Notice was remitted for re-adjudication. The petitioner was granted 30 days to file a further reply, and the Proper Officer was directed to pass a fresh order within the prescribed period under Section 75(3) of the Act. The court clarified that it did not delve into the merits of the case and reserved all rights and contentions of the parties. The challenge to Notification No. 56 of 2023 regarding time extension was left open, and the petition was disposed of accordingly.