Case Law Details
Mudita Express Cargo Private Limited Vs Commissioner, State Goods and Services Tax Delhi & Anr. (Delhi High Court)
In a recent judgment, the Delhi High Court addressed the case of Mudita Express Cargo Private Limited versus the Commissioner, State Goods and Services Tax, Delhi & Another. The court quashed a tax demand of Rs 2.4 crore against the petitioner, citing insufficient reasoning for rejecting their response to the Show Cause Notice (SCN).
The petitioner challenged an order dated 30.12.2023, wherein a tax demand of Rs 2,40,37,812/- was proposed against them under Section 73 of the Central Goods and Services Tax Act, 2017. Despite the petitioner submitting detailed replies with supporting documents, the impugned order did not consider their responses adequately. The court noted that the order was cryptic and lacked proper consideration of the petitioner’s submissions.
The court observed that the Proper Officer deemed the petitioner’s reply as unsatisfactory, incomplete, and lacking adequate documents without proper examination. The order failed to demonstrate that the Proper Officer had applied their mind to the petitioner’s submissions. Moreover, the petitioner was not given an opportunity to clarify their replies or provide further details, if necessary.
Given these shortcomings, the court set aside the impugned order and remitted the show cause notice to the Proper Officer for re-adjudication. The petitioner was granted 30 days to file a further reply, and the Proper Officer was directed to conduct a fresh adjudication with a personal hearing and pass a speaking order within the prescribed period.
The Delhi High Court’s decision emphasizes the importance of proper consideration of submissions and due process in tax matters. By quashing the tax demand and ordering re-adjudication, the court ensures that the petitioner’s rights are protected and that justice is served. This ruling underscores the significance of fair and transparent procedures in tax proceedings, contributing to the integrity of the taxation system.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Petitioner impugns order dated 30.12.2023 whereby the impugned Show Cause Notice dated 25.09.2023 proposing a demand of Rs 2,40,37,812/- against the petitioner had been disposed of and 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. Issue notice. Notice is accepted by learned counsel appearing for respondent. With the consent of the parties, petition is taken up for final disposal today.
3. Learned counsel for Petitioner submits that Petitioner had filed a detailed replies dated 25.10.2023, 02.11.2023 and 14.11.2023 however, the impugned order dated 30.12.2023 does not take into consideration the replies submitted by the Petitioner and is a cryptic order.
4. Perusal of the Show Cause Notice dated 25.09.2023 shows that the Department has given reasons under separate headings i.e., under declaration of output tax; excess claim of Input Tax Credit [“ITC”] and under declaration of ineligible ITC. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving response under each of the heads with supporting documents.
5. The impugned order, however, after recording the narration records that the reply uploaded by the taxpayer is incomplete, not duly supported by adequate documents and unable to clarify the issue. It states that “And whereas, the taxpayer had filed their objections/reply in DRC-06 and appeared personally. However, during the personal hearing, the taxpayer reiterated the contents of the reply filed in form DRC-06. On scrutiny of the same, it has been observed that the same is incomplete, not duly supported by adequate documents and unable to clarify the issue. Since, the reply filed is not clear and satisfactory, the demand of tax and interest conveyed via DRC-01 is confirmed.” The Proper Officer has opined that the reply is unsatisfactory, incomplete, not duly supported by adequate documents and unable to clarify the issue.
6. The observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the replies dated 25.10.2023, 02.11.2023 and 14.11.2023 filed by the Petitioner are detailed replies with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is unsatisfactory, incomplete, not duly supported by adequate documents and unable to clarify the issue which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner.
7. 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 replies or furnish further documents/details.
8. In view of the above, the impugned order dated 30.12.2023 cannot be sustained and is set aside. The show cause notice is remitted to the Proper Officer for re-adjudication.
9. Petitioner may file a further reply to the Show Cause Notice within a period of 30 days from today. 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.
10. 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.
11. Petition is disposed of in the above terms.
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