Case Law Details
Sahib Textiles Private Limited Vs Sales Tax Officer (Delhi High Court)
In a notable ruling, the Delhi High Court has set aside a GST order issued under Section 73 of the Central Goods & Services Tax Act, 2017 (CGST Act) and the Delhi Goods & Services Tax Act, 2017 (DGST Act) against Sahib Textiles Private Limited. The court’s decision to cancel the GST order was based on the failure to adequately consider the essential contentions raised by the petitioner in response to the Show Cause Notice (SCN).
Background of the Case
The petitioner, Sahib Textiles Private Limited, challenged an order dated April 24, 2024, which imposed a tax demand of ₹88,89,593. This order was issued following an SCN dated December 10, 2023, which alleged incorrect tax filing on inward supplies. The SCN indicated discrepancies between the E-way Bill turnover and GSTR-09, alleging underdeclared tax amounting to ₹88,89,593, comprising SGST, CGST, IGST, and Cess.
Petitioner’s Arguments
The petitioner contested the order on several grounds:
Non-consideration of Replies: The impugned order did not address any of the contentions or evidence provided by the petitioner in its response to the SCN. The petitioner had submitted a detailed ledger and invoices, which were not acknowledged or discussed in the order.
Improper Issuance of Order: The petitioner argued that the impugned order was issued by an officer who did not issue the SCN, raising concerns about procedural correctness.
Lack of Proper Hearing: The petitioner claimed that the personal hearing mentioned in the impugned order was not granted in response to the petitioner’s reply but was instead pre-scheduled before the reply was filed.
Court’s Findings
The Delhi High Court reviewed the case and noted the following:
Failure to Address Contentions: The court observed that the impugned order failed to specifically address the petitioner’s detailed replies and evidence, merely dismissing them as lacking merit without proper justification.
Incorrect Procedure: The court found that the order was incorrect in stating that the personal hearing was granted after the petitioner’s reply, whereas it was scheduled prior to the submission of the reply.
Remand for Reconsideration: Given these procedural lapses, the court decided to set aside the impugned order and remand the case to the concerned officer. The petitioner was granted an opportunity to provide additional documents and a reconciliation statement within three weeks. The case was to be decided afresh, ensuring that all contentions and evidence were properly considered.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Issue notice.
2. The learned counsel appearing for respondents no.1&2 accepts notice.
3. The petitioner impugns an order dated 24.04.2024 (hereafter the impugned order) under Section 73 of the Central Goods & Services Tax Act, 2017 (hereafter CGST Act) and Delhi Goods & Services Tax Act, 2017 (hereafter DGST Act), inter alia, raising a tax demand of ₹88,89,593/-.
4. The petitioner has challenged the impugned order on several grounds including that the impugned order has been passed without considering any of the contentions raised by the petitioner pursuant to the Show Cause Notice dated 10.12.2023 (hereafter SCN). The petitioner, inter alia, also seeks to assail the impugned order on the ground that it has not been issued by an officer who had issued the SCN.
5. The petitioner was issued the SCN dated 10.12.2023, inter alia, alleging that the petitioner had incorrectly filled the tax on inward supplies and the same was evident from a reconciliation of the E-way Bill turnover with GSTR-09. The petitioner was called upon to explain the underdeclared tax aggregating ₹88,89,593 [SGST ₹9,22,964/-; CGST ₹9,22,964/-; IGST ₹69,63,807/- & Cess ₹79,858/-].
6. The petitioner responded to the SCN in the requisite form (Form GST DRC-06) on 10.01.2024, inter alia, stating that it had not claimed most of the Input Tax Credit (ITC) as alleged to have been claimed, in the SCN. The petitioner also annexed a detailed ledger with copies of the invoices in support of its claim that it had not claimed the ITC as was set out in the SCN.
7. The impugned order does not specifically deal with any of the contentions raised by the petitioner in his reply to the SCN. It merely states that the said reply was “examined thoroughly and found to be devoid of merits”. It also observed that the reply was without any justification or proper reconciliation.
8. It is noticed that the petitioner in his reply to the SCN has set out the ledger account in respect of the supplies received from eight named suppliers along with the bills. However, the impugned order does not refer to the same or provides any reason why the petitioner’s claim was found to be unmerited.
9. The impugned order also indicates that since the petitioner’s reply was found to be unsatisfactory, an opportunity of personal hearing was granted to the petitioner. This is incorrect. The petitioner claims that date of personal hearing before the Proper Officer was mentioned in the SCN – which was obviously prior to petitioner’s reply to the SCN – and not pursuant to any queries that the concerned officer had in respect of the reply to the SCN.
10. In the circumstances, we consider it apposite to set aside the impugned order and remand the matter to the concerned officer for consideration afresh. The petitioner is also permitted to furnish a reconciliation statement and such further documents, which the petitioner considers relevant within a period of three weeks from today. The concerned officer shall decide afresh after affording the petitioner an opportunity of being heard. We clarify that we have not examined the petitioner’s challenge to the impugned order on merits and nothing stated in this order can be construed as such.
11. All rights and contentions of the parties are reserved.
12. The petition is disposed of in the aforesaid terms.
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