2023 (9) TMI 229 - HC - GST

Validity of adjudication order confirming demand of GST with interest and penalty - Cryptic SCN - validity of Audit Observations - sufficient opportunity of hearing not provided to the petitioner - principles of natural justice - HELD THAT - This Court finds that it would be appropriate if the observations in the Audit Report and the intimation given by the Department be read as part and parcel of the Show Cause Notice and while observing so, the petitioner would be at liberty to make out a fresh reply in light of the observations made, thereby the Show Cause Notice at Annexure-'D' dated 13.10.2022 is now deemed to include the observations in the Audit Report as well as the Intimation of Tax ascertained at Reference-4 and such reply to the Show Cause Notice to be made out by the petitioner within four weeks from the date of receipt of Certified Copy of today's order. It is noticed rightly that the petitioner's reply has adverted to only certain aspects and not to the entirety of the observations made in the Audit Report and accordingly, the contention of the petitioner that Show Cause Notice at Annexure-'D' by itself does not contain all the grounds, requires acceptance, in the facts of the present case. The matter is remitted back to the Authority - Petition allowed by way of remand.

Summary

Issues:
The validity of Audit Observations, Audit Report, Show Cause Notice, Order of Adjudication, and Summary of Order challenged by the petitioner.

Validity of Show Cause Notice:
The petitioner challenges the Show Cause Notice as being cryptic and resulting in an ineffective reply, contending that the Order of Adjudication is vitiated for not providing sufficient opportunity to respond adequately. It is argued that the lack of detailed grounds in the Show Cause Notice deprived the petitioner of the opportunity to present their case effectively, as the demand would rely on the grounds outlined in the Notice.

Contentions of the Revenue:
The Additional Government Advocate representing the Revenue asserts that the Show Cause Notice appropriately references the Audit Report under relevant tax Acts and the Intimation of Tax mentioned in the Notice, along with the petitioner's reply. The Revenue argues that the petitioner's contention lacks substance due to these references in the Notice.

Court's Decision and Directions:
The Court acknowledges the petitioner's concerns and deems it appropriate to consider the observations in the Audit Report and the Department's intimation as part of the Show Cause Notice. Consequently, the petitioner is granted the liberty to submit a fresh reply within four weeks, incorporating these observations. It is noted that the petitioner's initial reply only addressed certain aspects, not the entirety of the Audit Report's observations, leading to acceptance of the petitioner's argument regarding the inadequacy of the Show Cause Notice in this case.

Disposition of the Case:
In light of the above, all proceedings subsequent to the challenged Audit Observations, Audit Report, Show Cause Notice, Order of Adjudication, and Summary of Order are set aside. The matter is remitted back to the Authority for further action. The petitioner is directed to provide a reply as specified, and the respondent is permitted to proceed lawfully. The Court keeps all contentions open, and the writ petition is disposed of accordingly.