Case Law Details
Mother Dairy Fruit & Vegetable Private Limited Vs Sales Tax Officer (Delhi High Court)
Introduction: In the case of Mother Dairy Fruit & Vegetable Private Limited vs. Sales Tax Officer, the Delhi High Court addressed the rejection of an Input Tax Credit (ITC) claim by the Proper Officer without affording the petitioner a fair opportunity for a hearing. The court found the order passed under Section 73 of the Central Goods and Services Tax (CGST) Act, 2017, to be inadequate in considering the petitioner’s detailed reply and lacking proper justification.
Detailed Analysis: The petitioner had submitted a detailed reply to the Show Cause Notice, providing full disclosures regarding the excess claim of Input Tax Credit (ITC), under declaration of ineligible ITC, and ITC claims from cancelled dealers, return defaulters, and tax non-payers. However, the impugned order passed on December 23, 2023, dismissed the petitioner’s response as unsatisfactory without proper consideration.
The Delhi High Court observed that the Proper Officer failed to adequately assess the petitioner’s reply on its merits. Instead, the officer deemed the reply as incomplete and unsupported by adequate documents without proper justification. The court highlighted the necessity for the Proper Officer to engage with the petitioner’s submissions and provide an opportunity for clarification if deemed necessary.
Moreover, the court emphasized that the petitioner was not afforded the opportunity to address any deficiencies in their reply or provide additional documents or details, which is essential for a fair adjudication process. Consequently, the impugned order was deemed unsustainable and set aside by the Delhi High Court.
Conclusion: In conclusion, the Delhi High Court’s decision in the case of Mother Dairy Fruit & Vegetable Private Limited vs. Sales Tax Officer underscores the importance of procedural fairness in adjudicating matters related to tax disputes. The court’s ruling serves as a reminder to Proper Officers to carefully consider taxpayers’ responses and provide them with adequate opportunities to present their case before making any adverse decisions.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Petitioner impugns order dated 23.12.2023, whereby the impugned Show Cause Notice dated 23.09.2023, proposing a demand against the petitioner has been disposed of and a demand of Rs. 7,95,34,5 14.00 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. Learned counsel for Petitioner submits that a detailed reply dated 08.12.2023 was filed to the Show Cause Notice, however, the impugned order dated 23.12.2023 does not take into consideration the reply submitted by the petitioner and is a cryptic order.
3. Perusal of the Show Cause Notice shows that the Department has given separate headings, inter alia, excess claim Input Tax Credit [“ITC”], under declaration of ineligible ITC and ITC claim from cancelled dealers, return defaulters and tax non-payers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving full disclosures under each of the heads.
4. The impugned order, however, after recording the narration, records that the reply uploaded by the tax payer is not satisfactory. It merely states that “And whereas, the taxpayer had filed their objections/reply in DRC-06 and appeared personally. However, during the personal hearing, the taxpayer reiterated the contents of the reply filed in form DRC-06. On scrutiny of the same, it has been observed that the same is not acceptable being incomplete, not duly supported by adequate documents, without proper justification and thus unable to clarify the issue..” The Proper Officer has opined that the reply is unsatisfactory.
5. The observation in the impugned order dated 23.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion whether the reply is not clear and unsatisfactory. He merely held that the reply is not clear and satisfactory which ex-facie shows that the Proper Officer has not applied his mind to the reply submitted by the petitioner.
6. Further, if the Proper Officer was of the view that reply was unsatisfactory and 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.
7. In view of the above, the order cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 23.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication.
8. As noticed hereinabove, the impugned order records that petitioner’s reply is not satisfactory. The Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner. Pursuant to the intimation being given, petitioner shall furnish the requisite explanation and documents. 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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