ITC Denial: Officer cannot reject detailed submission by merely stating that reply is unsatisfactory

Safe Fly Aviation Services Private Limited Vs Union Of India And Ors (Delhi High Court)

Introduction: In the case of Safe Fly Aviation Services Private Limited Vs Union Of India And Ors, the Delhi High Court (HC) recently issued a significant directive. The court addressed the denial of an excess Input Tax Credit (ITC) claim without providing adequate reasoning. This article delves into the details of the case, the court’s observations, and the implications of its directive.

Detailed Analysis: The crux of the matter lies in the order dated 30.12.2023, where the Delhi HC scrutinized the implications of the impugned Show Cause Notice issued on 23.09.2023. This notice proposed a substantial demand against Safe Fly Aviation Services Private Limited, totaling Rs. 2,92,00,768.00, under Section 73 of the Central Goods and Services Tax Act, 2017.

Safe Fly Aviation Services Private Limited, the petitioner, had responded to the notice with a detailed reply dated 20.10.2023. However, the court noted with concern that the subsequent order failed to adequately consider the petitioner’s submission. Despite the petitioner’s comprehensive response addressing various heads mentioned in the Show Cause Notice, the order labeled the reply as unsatisfactory in a cursory manner.

The court emphasized that the Proper Officer, tasked with assessing the reply, appeared to have dismissed it without due consideration. The lack of detailed reasoning in the order raised questions about the application of mind by the Proper Officer. Moreover, the court highlighted the absence of any opportunity granted to the petitioner to clarify or supplement their response, indicating procedural irregularities.

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