Case Law Details
Khemka Aviation Private Limited Vs Sales Tax Officer Class II/Avato Ward 1 & Ors (Delhi High Court)
The petitioner challenged an order dated April 30, 2024, issued under Section 73 of the CGST/DGST Act for the financial year 2018-19, arguing that the order is unreasoned and disregards the petitioner’s response. The order, which followed a Show Cause Notice (SCN) dated December 13, 2023, demanded payment due to allegedly inadmissible input tax credit (ITC) related to motor vehicle services and airline travel. The petitioner had asserted that it did not claim ITC on these services, providing supporting documents. However, the Adjudicating Authority rejected the response without adequate explanation. The court noted a pattern of such unreasoned orders being issued just before the expiration of the statutory limitation period, potentially to secure demands that might not hold up under scrutiny. The court has issued notice to the respondents and requested affidavits detailing the frequency and officer-wise breakdown of similar orders, along with how many have been challenged and set aside as unreasoned. The impugned order is stayed pending further proceedings, with the next hearing scheduled for August 29, 2024.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition impugning an order dated 30.04.2024(hereafter the impugned order) on several grounds, including, that it is an unreasoned order.
2. The impugned order was passed under Section 73 of the Central Goods and Services Tax Act, 2017 (hereafter CGST Act)/Delhi Goods and Services Tax Act, 2017 (hereafter DGST Act) in respect of Financial Year 2018-19. The impugned order was passed pursuant to a Show Cause Notice dated 13.12.2023 (hereafter the SCN), whereby the petitioner was called upon to show cause as to why the proposed demand should not be raised on account of inadmissible input tax credit (hereafter ITC) in respect of motor vehicle services and airlines travel.
3. The petitioner had responded to the said SCN by stating that it has not availed the ITC in respect of the said supplies. In support of its claim, the petitioner has enclosed with his reply, a tabular statement setting out the parties from whom the petitioner had availed inputs and the adjustments.
4. The Adjudicating Authority rejected the response of the petitioner by simply stating that the reply is not satisfactory.
5. This Court is inundated with writ petitions challenging such unreasoned orders, which have been issued on the last few days of the extended period of limitation for passing such orders.
6. It is apparent that such orders are not informed by reason and fail to consider the responses submitted by the tax payers. It appears that these orders have been passed only to somehow raise a demand prior to the expiry of the limitation period and perhaps being fully conscious that said orders would not sustain.
7. The entire purpose appears to be, to bypass the statutory period of limitation. Prima facie, this would be a fraud on the statute and ought not to be countenanced.
8. Issue notice. Learned counsel appearing on behalf of the respondents accept notice.
9. Mr. Aggarwal, learned counsel for respondent no. 1 seeks time to file counter-affidavit.
10. Respondent no. 2 and 3 shall also file an affidavit affirming the number of orders, which have been passed on the last three days of the extended period of limitation; the number of writ petitions which have been filed before this court challenging such orders; the number of orders, which have set aside on the ground that they are unreasoned. The affidavit shall indicate the number of such orders passed officer-wise indicating the number of orders passed by the respective officers during the last three days of the extended period of limitation.
11. List on 29.08.2024.
12. In the meanwhile, the impugned order is stayed.
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