Case Law Details
JIG Brothers Vs Sales Tax Officer (Delhi High Court)
In a significant judgment, the Delhi High Court ordered the re-adjudication of a Show Cause Notice (SCN) and the subsequent demand order against JIG Brothers. The crux of the matter was the petitioner’s unawareness of the ongoing proceedings, which arose because their accountant, responsible for GST compliance, was on maternity leave.
The case revolves around an impugned order dated April 17, 2024, which finalized a demand of ₹7,30,212.00 against JIG Brothers under Section 73 of the Central Goods and Services Tax Act, 2017. The proceedings were initiated with an SCN issued on December 27, 2023, alleging excess claims of Input Tax Credit (ITC) and discrepancies in the ITC availed in GSTR-3B compared to the tax declared by suppliers.
Petitioner’s Argument
The petitioner contended that the SCN was not responded to because their accountant, who handled GST compliance, was on a 12-week maternity leave. As a result, the petitioner was unaware of the SCN and thus did not furnish a reply. This absence was not intentional but due to unavoidable circumstances.
Court’s Observations
The court noted that the impugned order recorded the absence of a reply from the petitioner and proceeded to create the demand ex-parte. The Proper Officer had concluded that despite opportunities, the petitioner neither filed a reply online nor appeared in person or through an authorized representative.
Decision for Re-Adjudication
Recognizing the unique circumstances of the case, the Delhi High Court deemed it necessary to provide the petitioner an opportunity to respond to the SCN. The court set aside the impugned order dated April 17, 2024, and remitted the matter to the Proper Officer for re-adjudication. The petitioner was directed to file a reply to the SCN within four weeks, following which the Proper Officer would re-adjudicate after a personal hearing and issue a fresh order in accordance with the law.
Conclusion
The Delhi High Court’s judgment in the JIG Brothers vs. Sales Tax Officer case highlights the judiciary’s role in ensuring fairness and justice. The decision to grant a re-adjudication reflects a balanced approach, taking into account the genuine difficulties faced by the petitioner. This case serves as a precedent for considering exceptional personal circumstances, such as maternity leave, that might affect compliance with legal procedures. By doing so, the court has reinforced the principle that legal processes should be just and equitable, allowing all parties a fair opportunity to present their case.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Petitioner impugns order dated 17.04.2024 whereby the impugned Show Cause Notice dated 27.12.2023 proposing a demand of Rs. 7,30,212.00/- against the petitioner has been disposed of and a demand including penalty has been created 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 the accountant of the Petitioner entrusted with GST compliance was on a maternity leave for 12 weeks. As a result, the petitioner was unaware of the proceedings and was unable to furnish a reply to the impugned Show Cause Notice.
4. Perusal of the Show Cause Notice dated 27.12.2023 shows that the Department has raised grounds under separate headings i.e., excess claim of Input Tax Credit [“ITC”]; Excess ITC availed in GSTR-3B compared to the tax on inward supplies declared by the suppliers.
5. The impugned order, however, after recording the narration records that demand as ex-parte is created. It states that “And whereas, after going through the contents of the attached SCN/DRC-01 explained therein, it has been found that the taxpayer has not replied to the said DRC-01/SCN till date. **** In view of the aforesaid circumstances, the undersigned is left with no other option but to create demand as ex-parte, in accordance with the provisions of CGST/DGST Act & Rules, 2017.” The Proper Officer has opined that despite providing another opportunity, neither an online reply has been filed nor has the petitioner appeared in person or through an authorized representative.
6. As noticed hereinabove, the petitioner was not aware of the proceedings due to his accountant being on maternity leave.
7. Keeping in view the peculiar facts of the present case and since the only reason for passing the impugned order is that petitioner had not filed any reply/explanation, one opportunity needs to be granted to the petitioner to respond to the Show Cause Notice. The matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 17.04.2024 is set aside.
8. Petitioner may file a further reply to the Show Cause Notice within four weeks 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.
9. 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.
10. The challenge to Notification No. 9 of 2023 with regard to the initial extension of time is left open.
11. Petition is disposed of in the above terms.
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