Case Law Details
Decolene Fibers Pvt. Ltd. Vs Commissioner DGST And Ors. (Delhi High Court)
The case of Decolene Fibers Pvt. Ltd. vs Commissioner DGST revolves around an order passed under Section 73 of the Central Goods and Services Tax Act, 2017. The petitioner contests an order dated 30.12.2023, which disposed of a Show Cause Notice (SCN) proposing a substantial demand against the petitioner. Despite filing a detailed reply, the petitioner argues that their response was not adequately considered, leading to a cryptic and unsatisfactory order.
The petitioner highlights that they had submitted a comprehensive reply on 17.10.2023 addressing each aspect outlined in the SCN. However, the impugned order fails to acknowledge or assess the merits of this response. Instead, it dismisses the petitioner’s submission as unsatisfactory without providing any substantive reasoning or addressing the specific contentions raised. This raises serious questions regarding the propriety and fairness of the adjudication process.
Furthermore, the court observes that the assessing officer did not demonstrate due diligence in evaluating the petitioner’s reply. There is a glaring absence of any indication that the officer considered the submitted documents or engaged in a meaningful review of the petitioner’s contentions. Such cursory assessment undermines the principles of natural justice and procedural fairness, which are integral to the adjudicatory process.
The court emphasizes that the assessing officer’s duty extends beyond a perfunctory examination of the taxpayer’s submissions. Even if the officer deemed additional information necessary, it was incumbent upon them to seek clarification from the petitioner. Failure to afford the petitioner an opportunity to supplement their response or address any perceived deficiencies violates the fundamental principles of audi alteram partem – the right to be heard.
Consequently, the court sets aside the impugned order and directs the matter to be remitted for re-adjudication. The assessing officer is instructed to afford the petitioner a fair and meaningful opportunity to present their case, including a personal hearing if necessary. The officer must adjudicate the SCN afresh, taking into account all relevant submissions and evidence, and issue a reasoned order within the statutory timeline prescribed under Section 75(3) of the Act.
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 24.09.2023, proposing a demand of Rs.88,34,701.00 against the Petitioner has been disposed of and a 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 reply dated 17.10.2023, however, the impugned order dated 30.12.2023 does not take into consideration the reply submitted by the Petitioner and is a cryptic order.
4. Perusal of the Show Cause Notice dated 24.09.2023 shows that the Department has given separate headings i.e., excess claim Input Tax Credit [“ITC”]; scrutiny of ITC availed on reverse charge; ITC to be reversed on non-business transactions & exempt supplies; and under declaration of ineligible ITC. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving disclosures under each of the heads.
5. Impugned order dated 30.12.2023 issued on Show Cause Notice dated 24.09.2023, after recording the narration records that the reply uploaded by the taxpayer is unsatisfactory. It states that “And whereas, in response to the DRC-01, the Taxpayer submitted his reply in DRC-06 and the reply of the registered person, as well as data available on GST Portal has been checked / examined and the reply / submission of the taxpayer is not found to be satisfactory.” The Proper Officer has opined that the reply is unsatisfactory.
6. The observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the reply dated 17.10.2023 filed by the Petitioner is a detailed reply 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, 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 reply or furnish further documents/details.
8. In view of the above, the impugned order dated 30.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 30.12.2023 is set aside and the matter is remitted to the Proper Officer for re-adjudication.
9. Petitioner shall file a 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. The challenge to Notification No. 9 of 2023 with regard to the initial extension of time is left open.
12. Petition is disposed of in the above terms.
Author Bio
