2024 (9) TMI 1003 - HC - GST

Violation of principles of natural justice - challenge to unreasoned orders passed under Section 73 of the Central Goods Services Tax Act, 2017 / Delhi Goods Services Tax Act, 2017 - HELD THAT - The orders impugned in these petitions are set aside and the matters remanded for consideration afresh by the adjudicating authority. It is also directed that the adjudicating authority shall not pass any adverse order against any of the petitioners without affording them a reasonable opportunity to be heard. We also clarify that all rights and contentions of the petitioners are reserved and the disposal of the present petitions would not preclude them from raising such contentions as advised including those that may have been raised in the present petitions. Petition disposed off.

Summary

Issues:
Challenging unreasoned orders under Section 73 of CGST Act and DGST Act, orders passed close to the limitation period.

Analysis:
The High Court considered a batch of petitions challenging unreasoned orders passed under Section 73 of the Central Goods & Services Tax Act, 2017 and Delhi Goods & Services Tax Act, 2017. The petitioners argued that these orders were issued without considering their responses to the Show Cause Notices and were issued in the last days before the expiration of the limitation period for the financial years 2017-18 and 2018-19. The court noted that a significant number of such orders were passed in the final days of the extended limitation period. The court called for details of these orders and found that some officers had passed a large number of orders in the last three days of the limitation period, with one officer passing 526 orders during that time frame.

One common feature of the impugned orders was that they merely repeated the demand proposed in the Show Cause Notices and rejected the taxpayers' responses as unsatisfactory. The petitioners argued that these orders should be set aside as they were essentially non-existent in the eyes of the law and were issued to circumvent the limitation period. However, the court did not find it appropriate to set aside all orders uniformly, as only some officers had issued a large number of such orders in the final days before the limitation period expired.

The court acknowledged the petitioners' contention that granting a further two-year period to complete the adjudication would defeat the purpose of having a specified period for the adjudicatory process. The respondents suggested remanding the matters back to the adjudicating authority for fresh adjudication within a specified period. The petitioners also raised concerns about the large number of Show Cause Notices issued for the initial three financial years, some of which were generated through Artificial Intelligence without proper vetting. The respondents agreed to review the Show Cause Notices and drop them if no infractions were found.

In light of the above, the court set aside the impugned orders and remanded the matters for fresh consideration by the adjudicating authority. The respondents were bound by the statements made on their behalf regarding the timeframe for disposal of remanded matters and the review of Show Cause Notices. The court directed that the adjudicating authority must not pass adverse orders without giving the petitioners a reasonable opportunity to be heard, preserving all rights and contentions of the parties. The petitions were disposed of accordingly, with pending applications also being resolved.