Case Law Details
Lakshman Pran Data Enterprises Vs Commissioner of Delhi Goods And Service Tax (Delhi High Court)
In a significant legal development, the Delhi High Court recently adjudicated on the case of Lakshman Pran Data Enterprises versus the Commissioner of Delhi Goods and Service Tax. The court’s decision to set aside a Goods and Services Tax (GST) order dated 26.12.2023 has drawn attention due to procedural irregularities and lack of sufficient grounds for rejecting the petitioner’s submissions.
The petitioner, Lakshman Pran Data Enterprises, challenged the legality of an order issued under Section 73 of the CGST/DGST Act, 2017. The core contention was the alleged excessive availing of Input Tax Credit (ITC) amounting to Rs. 4,52,09,706.00. The case revolved around the period from July 2017 to March 2018, with the petitioner disputing the imposition of an aggregate demand totaling Rs. 2,73,78,128.40, comprising SGST and CGST.
The court noted several critical discrepancies in the proceedings. Firstly, the petitioner argued that the Show Cause Notice issued on 23.09.2023 and subsequent reminder notices were time-barred under the statute of limitations. Secondly, the petitioner contended that despite receiving a reminder notice, there was no actual mention or scheduling of a personal hearing, rendering the process defective.
Furthermore, the court highlighted the lack of reasoning in the impugned order dated 26.12.2023. The order failed to articulate valid grounds for rejecting the petitioner’s detailed response and merely referenced an unsatisfactory examination of GST portal data. Moreover, the court observed that the respondent’s claim of providing a personal hearing was erroneous, as the reminder notice did not specify any date or venue for such a hearing.
Consequently, the Delhi High Court concluded that the impugned order lacked substantive reasoning and violated procedural norms. It emphasized that the petitioner’s right to a fair hearing had been compromised, necessitating the order’s annulment. The court set aside the order dated 26.12.2023 and remanded the matter to the concerned authority for a fresh consideration, affirming the petitioner’s entitlement to proper procedural safeguards.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Issue notice.
2. Learned counsel for the respondents accept notice.
3. The petitioner has filed the present petition inter–alia impugning an order dated 26.12.2023.
4. The petitioner also impugns the Notification No.9/2023-Central Tax dated 31.03.2023, whereby the time limit specified under Section 73(10) of Central Goods and Services Act, 2017 (hereafter “the CGST Act, 2017”) for passing an order under Section 73 (9) of the CGST Act, 2017 inter–alia for the year 2017-18, was extended up to 31.12.2023, in exercise of power conferred under Section 168A of the CGST Act, 2017.
5. The petitioner further claims that the Show Cause Notice dated 23.09.2023 and a further notice (reminder notice) dated 08.12.2023 is barred by limitation.
6. The petitioner is the sole proprietor of the concern (M/s Lakshman Pran Data Enterprises) which is registered with the GST Authorities and has been assigned Goods and Services Tax Identification No.07BEFPK0080J1ZM.
7. The petitioner claims that it is trading goods described as “Iron” and “Pulses”. The controversy in the present petition relates to the tax period from July, 2017 to March, 2018. The petitioner filed its return (in Form GSTR-9) for the aforesaid period on 09.03.2020, declaring its GST liability as well as the Input Tax Credit (hereafter ITC) availed and utilized as per its books of accounts.
8. The petitioner claims that subsequently, on 11.03.2020, it also furnished a re-conciliation statement under Form GSTR-9C for the relevant tax period (July, 2017 to March, 2018), disclosing the reasons for the unreconciled payment amounts.
9. On 23.09.2023, the respondent no.2 issued a Show Cause Notice under Section 73 of the Delhi Goods and Service Tax Act, 2017 (DGST Act, 2017) alleging that the petitioner had availed excess Input Tax Credit (including interest) to the extent of Rs.4,52,09,706.00.
10. The petitioner was called up to submit his reply to the said Show Cause Notice and was also informed that the personal hearing was fixed on 09.10.2023 at 11.30 AM.
11. The petitioner filed his response to the aforesaid Show Cause Notice inter–alia stating that some of the goods (pulses) dealt with by the petitioner were tax free goods, and the ITC on such goods had not been availed. Thereafter, on 08.12.2023, the respondent no.2 issued another notice (Reminder Notice) under Section 75 (4) of the DGST Act, 2017, calling upon the petitioner to submit his reply to the Show Cause Notice on or before 11.12.2023. The petitioner was also informed that he may appear before the concerned officer for a personal hearing either in person or through an authorized representative on the time and venue as mentioned in the tabular statement set out in the notice. However, the tabular statement did not mention any date of personal hearing against the entry – “date of hearing”. The relevant entry, which should have mentioned the date of personal hearing, reads as “NA”, indicating that the same was “Not Applicable”. Thus, it is apparent that the petitioner was not called for any personal hearing by virtue of the Reminder Notice.
12. The petitioner responded to the reminder notice and furnished sale and purchase invoices under cover of the letter dated 11.12.2023.
13. Thereafter on 26.12.2023, the respondent passed the impugned order under Section 73 of the CGST/DGST Act raising an aggregate demand of Rs. 2,73,78,128.40/- comprising SGST of Rs.1,36,89,064.20 (including interest) and CGST of Rs.1,36,89,064.20.
14. It is relevant to note that the annexure to the impugned order does not provide any reasons for rejecting the response submitted by the petitioner. It merely states that the petitioner’s reply as well as data available on the GST Portal was checked and examined and the reply was not found to be satisfactory. The said annexure also notes that the petitioner was afforded an opportunity of personal hearing in terms of Section 75 (4) of the DGST Act, 2017 by issuance of a ‘Reminder’ (Reminder Notice). However, the same is incorrect as the Reminder Notice did not mention the date, time or venue for the personal hearing. As noted above, and the entry against the said details only mentioned “NA”, that is, “Not Applicable”.
15. The petitioner submits that the time period for passing the impugned order dt. 26.12.2023 had lapsed and the Show Cause Notice dt.23.09.2023 as well as the impugned order dt.26.12.2023 is beyond the period of limitation.
16. As is noted above, the petitioner also impugns the notification dated 31.03.2023 issued under Section 168A of the CGST Act, 2017.
17. The learned counsel for the petitioner submits that the impugned order is unreasoned and is liable to be set aside on that ground alone.
18. We find considerable merit in the aforesaid contention. A plain reading of the impugned order indicates that it does not set out any reasons for rejecting the petitioner’s response to the Show Cause Notice. It is also apparent that the petitioner was not afforded a personal hearing pursuant to the Reminder Notice dated 23.09.2023 and the impugned order incorrectly proceeds on the basis that such personal hearing was afforded to the petitioner.
19. In view of the above, it is not necessary to examine the petitioner’s contentions that the impugned order was passed beyond the period of limitation.
20. We set aside the impugned order dt. 26.12.2023 and remand the matter to the respondent no.2 for consideration afresh.
21. We clarify that all rights and contentions of the parties are reserved and nothing stated in this order be construed as an expression of opinion on the merits of the allegations raised in the petitioner’s defence. It is open to the petitioner to raise such defences, as may be advised.
22. It is also clarified that this order will not preclude the petitioner from challenging the impugned notification, if necessary, at a later stage.
23. All pending applications are also disposed of.
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