Case Law Details
A. B Traders Vs Commissioner of Delhi Goods And Service Tax & Anr (Delhi High Court)
The recent judgment by the Delhi High Court in the case of A. B Traders vs Commissioner of Delhi Goods and Service Tax & Anr sheds light on the complexities surrounding Input Tax Credit (ITC) claims under the Central Goods and Services Tax Act, 2017. The court’s decision to direct re-adjudication following a flawed order signifies the significance of fair and thorough assessment in tax matters.
The petitioner, A. B Traders, contested the order dated 25.12.2023, which disposed of a Show Cause Notice (SCN) issued on 26.09.2023, demanding Rs. 44,48,488.00. The petitioner argued that their detailed reply dated 23.10.2023 was not adequately considered in the impugned order, which was passed under Section 73 of the CGST Act.
The court observed discrepancies in the handling of the petitioner’s response by the tax authorities. While the petitioner provided comprehensive disclosures under each allegation in the SCN, the impugned order merely brushed over the contentions without a thorough examination. Particularly, the court noted that the Proper Officer deemed the petitioner’s reply insufficient and unsatisfactory without substantial justification.
Furthermore, the court highlighted the failure of the Proper Officer to consider the documents submitted by the petitioner, which are crucial for assessing the admissibility of input tax credit. The absence of proper scrutiny and justification for rejecting the petitioner’s claims warranted the court to set aside the impugned order and remit the matter for re-adjudication.
The court’s directive for re-adjudication emphasizes the importance of procedural fairness and adherence to legal principles in tax proceedings. By allowing the petitioner an opportunity to submit additional documents and ensuring a fresh examination of the issues raised in the SCN, the court upholds the principles of natural justice and due process.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
Petitioner impugns order dated 25.12.2023, whereby the impugned Show Cause Notice dated 26.09.2023, proposing a demand of Rs. 44,48,488.00 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 25.12.2023 does not take consideration the reply submitted by the Petitioner in full consideration and has passed a cryptic order.
3. Perusal of the Show Cause Notice shows that the Department has given separate headings i.e., under declaration of output tax; excess claim Input Tax Credit [“ITC”] and ITC claimed from cancelled dealers, return defaulters and tax non payers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving disclosures under each of the heads.
4. The impugned order, however, after recording the narration, records that the reply uploaded by the taxpayer is insufficient and unsatisfactory. It merely states that “And whereas, the Taxpayer filed reply/explanation on dated 23.10.2023 and 26.10.2023. And whereas, reply filed by the taxpayer was examined as per the detail given below: Point 1. Under declaration of output tax: Reconciliation of GSTR-01 with GSTR-09 Reply given by the taxpayer in this regard is insufficient as it does not clear the amount of revision of bills. Accordingly demand is created. Point 2: Excess claim of ITC: Reply filed by the taxpayer in this regard is considered. Hence, the demand is not pressed. Point 3: Scrutiny of ITC reversal this point is not replied by the taxpayer, accordingly, demand is created. Point 4: ITC claimed from cancelled dealers, return defaulters & tax non payers: The taxpayer has submitted that it has made genuine transactions with the supplier M/s ETA GENERAL PVT LTD stated in SCN and has made payment of tax to the Govt exchequer before cancellation of GST registration. The same was found not satisfactory as per the detail given below.” The Proper Officer has opined that the reply is insufficient and unsatisfactory.
5. The impugned order does not specifically deal with the reply dated 23.10.2023 given by the petitioner, however, refers to certain judgment to hold that the burden to prove admissibility of any input tax credit cannot be shifted to the Tax Authorities. The Proper Officer has not even considered the reply of the petitioner along with the enclosed documents and merely held that the burden cannot be shifted on the Tax Authorities. The Proper Officer had to examine the documents submitted by the petitioner and then hold whether the input tax credit is admissible or not. The Proper Officer has not stated as to why such transactions are not acceptable.
6. The impugned order dated 25.12.2023 is accordingly set aside. The matter is remitted to the Proper Officer to re-adjudicate the issues i.e. Point No. 1, 3 and 4. Point No. 2 has already been held in favour of the petitioner wherein the demand has been dropped and the same need not be referred back to the Proper Officer.
7 In case the petitioner is required to file any further documents, petitioner shall file the same within two weeks from today in support of his reply to the Show Cause Notice and 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.
8. 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.
9. Petition is disposed of in the above terms.
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