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Case Law Details

Case Name : Aarem Trad Ex Private Limited Vs Sales Tax Officer & Anr. (Delhi High Court)
Appeal Number : W.P.(C) 2767/2024 & CM APPL. 11319/2024
Date of Judgement/Order : 23/02/2024
Related Assessment Year :

Aarem Trad Ex Private Limited Vs Sales Tax Officer & Anr. (Delhi High Court)

The Delhi High Court recently addressed a case where Aarem Trad Ex Private Limited contested an order concluding proceedings under Section 73 of the Central Goods and Service Tax Act 2017. The demand was based on an alleged error in claiming Integrated GST credit instead of CGST and SGST credit, attributed to a bona fide clerical mistake.

In the petition, Aarem Trad Ex Private Limited argued that the claimed Integrated GST credit was an inadvertent clerical error and that the correct credits were CGST and SGST. The company asserted that the amount, despite the error, remained to its credit, and they had promptly informed the authorities about the mistake in response to the Show Cause Notice.

The crux of the petitioner’s grievance was the lack of consideration of their detailed reply by the authorities. The impugned order, dated 22.12.2023, failed to address the merits of the explanation provided by the petitioner. Instead, it stated that the reply was not found comprehensive and proceeded to create a demand.

The Delhi High Court, in its analysis, highlighted the inadequacy of the impugned order. The court observed that the order did not provide any reasoning, and the observation about the reply not being comprehensive was not sustainable. It noted that the proper officer did not appear to have considered the petitioner’s detailed reply and set aside the order.

The court remitted the matter to the proper officer, directing a re-adjudication of the Show Cause Notice. It emphasized the necessity of the proper officer considering the reply on its merits and giving the petitioner an opportunity for a personal hearing. The court also granted permission for the petitioner to file an additional reply to the Show Cause Notice within a week.

The Delhi High Court’s decision in Aarem Trad Ex Pvt Ltd’s case underscores the importance of a thorough examination of responses provided by taxpayers in GST proceedings. The court’s ruling ensures a fair adjudication process and upholds the principle of considering detailed replies before creating demands. The matter has been remitted to the proper officer for re-adjudication, and the challenge to the subject notifications has been left open.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. Petitioner impugns order dated 22.12.2023 whereby the proceedings under Section 73 of the Central Good and Service Tax Act 2017 have been concluded and a demand has been created against the petitioner.

2. Learned counsel for petitioner submitted that the petitioner had, on account of an error, claimed Integrated GST credit instead of CGST and SGST credit which was a mere bonafide clerical error.

3. He submitted that the amount is still lying to the credit of the petitioner and that the petitioner had duly informed the authorities of the same in response to the Show Cause Notice.

4. He further submitted that the impugned order does not record any finding on the said reply or even advert to the reply filed by the petitioner. It merely states that the reply was not found comprehensive.

5. It is noticed that the order dated 22.12.2023 records that “Since, no payment has been made within 30 days of the issue of the notice by you; therefore, on the basis of documents available with the department and information furnished by you, if any, demand is created for the reasons and other details attached in annexure”.

6. Further, the observation in the impugned order dated 22.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply.

7. The proper officer had to at least consider the reply on merits and then form an opinion whether the explanation was sufficient or not. He merely held that “ since no payments has been made within 30 days of the issue of notice by you and no proper reply/explanation has been received” which ex-facie shows that proper officer has not even looked at the reply submitted by the petitioner.

8. Accordingly the Impugned order being bereft of any reasoning is not sustainable and is set aside.

9. The matter is accordingly remitted to the proper officer to re-adjudicating the Show Cause Notice after giving an opportunity of personal hearing to the petitioner.

10. At request of learned senior counsel for the petitioner, we permit the petitioner to file additional reply to the Show Cause Notice within a period of one week from today.

11. The challenge to the subject notifications raised by the petitioner is left open.

12. The petition is allowed in the above terms.

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