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TMI Blog2023 (7) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner-M/s Abhay Traders on 22.06.2022 indicating that with regard to two purchases made from M/s Raghav Enterprises vide Invoice Detail Nos.94 and 95 on 12 June, 2018 of the value of Rs. 2,64,022/- and Rs. 8,00,088/-, it was found that there had been no actual supply of goods from M/s Raghav Enterprises to the petitioner. It was also found that M/s Raghav Enterprises was a bogus firm. Under such circumstances, a notice was issued to the petitioner on 22 June, 2022 asking it to reply as to why tax, penalty and interest be not imposed upon the petitioner. It was stated that because the petitioner had made a bogus supply, the Input Tax Credit, which the petitioner had claimed, was wrongly claimed. 3. Learned counsel for the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings. If only it "appeared" to the proper officer that tax had not been paid or short paid or erroneously refunded or where Input Tax Credit had been wrongly availed or utilized by reason of fraud or any wilful statement or suppression of fact, the proceeding could be initiated. 6. Sri Ankur Agarwal, learned counsel for respondent nos.1 and 2 submitted that in the instant case, when it only appeared to the proper officer that the Input Tax Credit had been wrongly availed, the proceedings had been correctly initiated. He also submitted that the challenge was only to a notice under Section 74 (1) of the Act, 2017 and, therefore, it was open for the petitioner to reply to the same at the appropriate stage and before the appropriate authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... national reported in (2011) 1 SCC 109. In the judgement mentioned above, Apex Court observed that it is trite law that unless the foundation of the case is laid in the show cause notice, the same cannot be treated as proper show cause notice and notice issued in a format without even striking out any relevant portion and without stating clear contraventions committed by the petitioner, will not substitute the requirement of proper show cause notice. Paragraph nos.21 and 22 of the Apex Court judgement in Gorkha Security Services Vs. Government (NCT of Delhi) (supra) are being quoted as below: "21. The central issue, however, pertains to the requirement of stating the action which is proposed to be taken. The fundamental purpose behind the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the High Court has failed to omit. We may hasten to add that even if it is not specifically mentioned in the show cause notice, but it can be clearly and safely discerned from the reading thereof, that would be sufficient to meet this requirement." 8. Hon'ble Apex Court in Dilip N Shroff Vs. Joint Commissioner of Income Tax reported in (2007) 6 SCC 329, has also observed that expression in Section 73/74 of the Act, 2017 "appears to be proper officer" is not to a casual act but should show the full application of mind by proper officer. 9. Purpose of the show cause proceeding is meant to give a person proceeded against a reasonable opportunity of making his objection against the proposed charges as indicated therein as observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich such charges are based;" 27. It is no doubt true that at the stage of show cause, the person proceeded against must be told the charges against him so that he can take his defence and prove his innocence. It is obvious that at that stage, the authority issuing the charge- sheet cannot, instead of telling him the charges, confront him with definite conclusions of his alleged guilt. If that is done, as has been done in this instant case, the entire proceeding initiated by the show cause notice gets vitiated by unfairness and bias and the subsequent proceeding becomes an idle ceremony." 10. Therefore, from the law laid down by the Apex Court in the judgement mentioned above, it is clear that requirement of principles of natural justice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply to the impugned show cause notice. Because the notice did contain the details about the foundation of the case, i.e. that there was no actual supply of goods on 12 June, 2018 by M/s Raghav Enterprises to petitioner, we are not quashing the show cause notice instead we are permitting the petitioner to also reply with regard to the fact that goods were in fact supplied to the petitioner from M/s Raghav Enterprises. 13. Under such circumstances, this writ petition is disposed of, allowing the petitioner to file his reply/objection against the impugned notice, along with relevant material, within one month. In his response, it shall be open to the petitioner to specifically submit his explanation regarding the fact that there was an actual ..... X X X X Extracts X X X X X X X X Extracts X X X X
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