Case Law Details
Kailash International Vs Commissioner of Delhi Goods And Service Tax & Anr (Delhi High Court)
In a recent judgment, the Delhi High Court addressed the case of Kailash International against the Commissioner of Delhi Goods and Service Tax & Anr. The court examined the order dated 28.12.2023, which disposed of a Show Cause Notice proposing a significant demand against the petitioner under Section 73 of the Central Goods and Services Tax Act, 2017.
The petitioner argued that despite submitting a detailed reply on 23.10.2023, the impugned order failed to consider their response adequately. The court noted that the reply covered various aspects mentioned in the Show Cause Notice, providing full disclosures under each head. However, the impugned order dismissed the petitioner’s reply as unsatisfactory and lacking substantial documents.
The court found this dismissal unjustified, emphasizing that the proper officer should have evaluated the petitioner’s reply on its merits before forming an opinion. Moreover, the court highlighted the absence of any request for further details from the petitioner, indicating a failure to engage with the submitted reply effectively.
Consequently, the court set aside the impugned order and remitted the matter to the proper officer for re-adjudication. The proper officer was instructed to communicate specific details/documents required from the petitioner and allow them an opportunity to provide explanations and additional documents. The court also directed the proper officer to pass a fresh order within the prescribed period, ensuring compliance with the law.
The Delhi High Court’s decision underscores the importance of proper evaluation and consideration of responses by GST authorities. It emphasizes the need for thorough assessment and engagement with taxpayer submissions before reaching conclusions. The judgment provides clarity on procedural fairness and highlights the duty of authorities to actively engage with taxpayers during adjudication processes.
In conclusion, the ruling in Kailash International Vs Commissioner of Delhi Goods and Service Tax & Anr serves as a reminder of the principles of natural justice and procedural fairness in tax matters, ensuring a balanced and transparent adjudication process.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Petitioner impugns order dated 28.12.2023, whereby the impugned Show Cause Notice dated 23.09.2023, proposing a demand of Rs. 5,17,43,004.00 against the Petitioner has been disposed of and a demand including penalty has been raised against the Petitioner. The order has been passed under Section 73 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the Act).
2. Learned counsel for Petitioner submits that Petitioner had filed a detailed reply dated 23.10.2023, however, the impugned order dated 28.12.2023 does not take into consideration the reply submitted by the Petitioner and is a cryptic order.
3. Perusal of the Show Cause Notice shows that the Department has given separate headings i.e., excess claim Input Tax Credit [“ITC”]; under declaration of ineligible ITC and ITC claimed from cancelled dealers, return defaulters and tax nonpayers. To the said Show Cause Notice, a detailed reply was furnished by the Petitioner giving full disclosures under each of the heads.
4. The impugned order, however, after recording the narration, records that the reply uploaded by the tax payer is not satisfactory and no substantial documents have been submitted by the taxpayer. It merely states “And whereas, for the sake of natural justice, another opportunity to submit reply and opportunity for Personal Hearing, as per provision of Section 75(4) CGST Act, was also provided to the taxpayer by issuing “REMINDER” through the GST However, the taxpayer did not appear for personal hearing on the given date and time. Since, no satisfactory reply / no substantial documents submitted by the taxpayer despite sufficient and repeated opportunities as well as not appeared for personal hearing, which indicate that the taxpayer has nothing to say in the matter. In view of aforesaid circumstances, the undersigned is left with no other option except to create demand, in accordance with the provisions of CGST /DGST Act & Rules, 2017, as per discrepancies already conveyed through SCN/ DRC-01.” The Proper Officer has opined that the taxpayer did not appear for the personal hearing on the given date and time and no satisfactory reply and substantial documents have been submitted by the taxpayer.
5. The observation in the impugned order dated 28.12.2023 is not sustainable for the reasons that the reply dated 23.10.2023 filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not satisfactory nor any substantial documents were submitted by the taxpayer which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the Petitioner.
6. 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.
7. In view of the above, the order cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 28.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication.
8. As noticed hereinabove, the impugned order records the reply furnished by the Petitioner as not satisfactory nor duly supported by adequate documents. Proper Officer is directed to intimate to the Petitioner details/documents, as maybe required to be furnished by the Petitioner. Pursuant to the intimation being given, Petitioner shall furnish the requisite explanation and documents. Thereafter, the Proper Officer shall re-adjudicate the show cause notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3) of the Act.
9. It is clarified that this Court has neither considered nor commented upon the merits of the contentions of either party. All rights and contentions of parties are reserved.
10. The challenge to Notification No. 9 of 2023 with regard to the initial extension of time is left open.
11. Petition is disposed of in the above terms.
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