Summary: In Tvl. Orange Sorting Machines (India) (P.) Ltd. v. Additional Commissioner [W.P. No. 4211 OF 2024 dated February 23, 2024], the Madras High Court addressed the validity of a show-cause notice (SCN) and subsequent order issued against the petitioner. The petitioner, engaged in manufacturing machines, had claimed refunds for accumulated Input Tax Credit (ITC) under the inverted duty structure. However, the SCN dated September 22, 2023, cited an erroneous refund without providing a detailed breakup. Despite the petitioner’s request for particulars in their reply dated December 18, 2023, the Department issued an order demanding repayment without addressing these requests. The High Court held that an SCN must contain sufficient details to allow the assessee to understand and contest the claim effectively. The lack of particulars in the SCN and order deprived the petitioner of a fair opportunity to respond. Consequently, the court quashed the impugned order and remitted the case for reconsideration.
Facts:
Tvl. Orange Sorting Machines (India) (P.) Ltd (“the Petitioner”) is engaged in the manufacturing of machines and claimed refunds of accumulated Input Tax Credit (“ITC”) under inverted duty structure. However, show-cause notice dated September 22, 2023 (“the SCN”) was issued in relation to refund applied. The Petitioner in its reply dated December 18, 2023 requested for a breakup of the amount for which specified as erroneous refund. The Department without providing a breakup of the claimed amount issued an order dated December 29, 2023 (“the Impugned Order”) demanding payment towards erroneous refund.
Issue:
Whether the SCN issued and order passed without providing required particulars based on which refund has been rejected is void?
Held:
The Hon’ble Madras High Court in W.P. NO. 4211 OF 2024 held as under
- Noted that, the SCN is required to provide the relevant particulars to enable the Assessee to understand the nature of alim being made against the Assessee, as it would not be possible for assessee to reply in meaning manner.
- Opined that, the SCN issued did not provide required particulars and merely stated the point of erroneous refund on account of inverted duty structure. Even after requesting, no details were provided and the Impugned Order was passed.
- Further Opined that, the Impugned Order and SCN is bereft of required particulars, thus the order calls for interference.
- Held that, the Impugned Order is quashed and matter is remitted back for reconsideration.
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