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In the matter of :
through its Proprietor

Case No. …………../2024
Section : 107 of DGST Act, 2017

1. That the petitioner was running a sole Proprietorship business in the name of M/s …………………………………..  since last many years from the registered address at ………………………………………………………………  and was trading in …………………………  and is a compliant Registered Taxpayer.

2. That the petitioner received a Form GST DRC–01 dated 27.09.2023 from GST officer ward, Delhi GST under section 73 of the CGST/DGST Act, 2017 demanding the CGST tax of Rs 418,129/-, SGST tax of Rs 418,129/- and equivalent amount of interest respectively in CGST and SGST resulting into a total demand of Rs 16,72,516. The same notice was unsigned and does not contain the detail of discrepancies noticed by the respondent.

3. That no discussion of any relied upon document was made by the respondent in the Show cause notice and in impugned order and no such documents was provided to the petitioner till date.

4. That the petitioner filed his reply dated 12.12.2023 online on the GST portal which was not considered by the respondent and the final order was passed unsigned on 29.12.2023 for a tax of Rs 378,784, interest of Rs 378,784 and a penalty of Rs 37,878/- respectively under the CGST and SGST which results into a total demand of Rs 15,90,892/- on the basis of his own surmises and conjectures and without application of mind.

Draft Sample Appeal for DRC-01 DRC-07 of FY 2017-18 GST

5. That the DRC-01 was issued for Rs 16,72,516/- and a final order was issued for a demand of Rs 15,90,892/-. However, the impugned order was totally vague, cryptic and a non-speaking order. The impugned order passed is not clarifying the discrepancies on which the tax, interest and penalty was levied. Therefore, it is very difficult to ascertain that how the respondent arrived at new tax, interest and penalty of Rs 15,90,982/-.

6. That no tax calculation was provided along with the order to the petitioner due to which the petitioner is unable to compute the tax, interest and penalty determined by the respondent. The order is not self-explanatory and is totally misleading and baseless.

7. That as per the impugned order, it is clearly evident that various suppliers had discharged the tax liability by filing the GSTR-3B of FY 2017-18. The petitioner had also complied all the conditions of Section 16 and is fully entitled for the Input Tax Credit. Therefore, no demand can be raised on account of non-deposit of taxes by the suppliers.

8. That as per the impugned order, it was clearly mentioned that “………. the 2 firms M/s…………………… and…………………….. were cancelled suo-moto and ab-initio and the reason of cancellation was not convincing.” Therefore, the demand of tax, interest and penalty for the above said 2 firms was raised wrongly.

9. That the Show Cause Notice issued by the respondent was wrongly issued and was time barred. The period of limitation was wrongly extended by Notification No. 13/2022 dt. 05.07.2022 under Section 168A of the CGST/DGST Act, 2017 and the same notification was not recommended by the GST Council and no extra ordinary event took place like flood, etc as mentioned in the Section 167A of the CGST/DGST Act, 2017.

10. That as per the impugned order, the supplier filed GSTR-3B with NIL turnover and the same was not provided to the petitioner to verify the correctness of the claim. Infact, the same was also not available with the respondent and secondly, there is no mechanism to check whether GSTR-3B was filed or not in FY 2017-18 and on the top of that there is no mechanism to verify that the supplier had deposited tax or not because as per Section 16, the registered person shall discharge his liability by utilising the ITC or by paying the tax in cash by filing the GSTR-3B. Therefore, once the GSTR-3B was filed by the supplier, the question of NIL turnover in GSTR-3B cannot affect the recipient because there may be some technical issues to the supplier due to which he might had filed NIL turnover in GSTR-3B and such issues are not available with the respondent and the petitioner and can be answered only by such supplier. Therefore, the notice may be issued to such supplier for filing GSTR-3B and was also not on record.

11. That the demand of tax of Rs 378,784 for CGST and SGST respectively was created on account of non-payment of taxes as per Section 16(2)(c) of the CGST Act, 2017 by the 2 suppliers namely M/s……………………… and M/s ……………………….. However, it was accepted by the respondent through his order Para 2 that “…………………………………………. some dealers has paid tax in 3B.”

Screenshot of the GSTIN portal of above suppliers was attached showing that both the above said suppliers had filed there GSTR-3B and GSTR-1 on time and complied the provisions of Section 16(2)(c) of the CGST Act. Hence, the petitioner had complied with Section 16(2)(c) and is fully eligible for the Input Tax Credit of the abovesaid suppliers.

12. That the respondent mentioned in his order in Para No. 3 that the M/s …………………………………………….  and M/s …………………….  is not found functioning at the time of field visit. However, the reason of cancellation is not convincing.”

Therefore, the respondent was also not satisfied with the field visit and reason of cancellation of the above said 2 firms and hence, the tax of Rs. 378,784/- under CGST and SGST respectively was levied on the petitioner.

That as per the impugned order, it was clearly stated that “the cancellation of dealer not fulfil the condition of Section 16(2) of filing the returns and was cancelled suo-moto from the date of registration

However, the screenshot of GST portal shows that both the suppliers had filed their returns.

Grounds of Appeal :-

1. That the order passed by the respondent is absolutely void and, on the surmises, and conjectures of the respondent.

2. That the respondent issued the notice after the limitation period by wrongly invoking the provisions of Section 168A and further extend the period of limitation. Therefore, the said notice (DRC-01) may be set aside.

3. That the replies filed by the petitioner were not considered and passed impugned order without application of mind.

4. That the impugned order was not providing the specific reasons on account of which the tax, interest and penalty was levied. Therefore, due to vague reasons and non self explanatory order, the impugned order may be liable to be quashed.

5. That the impugned order and the Show cause notice was not signed by the proper officer and hence, it lacks the validity, accuracy and correctness of the Notice and Order. Hence, such notice and order deserves to be quashed.

6. That the no relied upon documents were provided by the respondent on the basis of which the tax, interest and penalty was levied which is in gross violation of Principle of Natural Justice and thus, the said proceedings may be liable to be quashed.

7. That the respondent was not sure at the time of issuing notice that the suppliers had filed the returns or not and consequently, issued the show cause notice without verifying the actual facts which clearly depicts that the respondent was working in a mechanical manner without application of mind and therefore, the entire demand may be deleted in full.

8. That the respondent was not convinced for the reasons of Show Cause Notice of the Cancelled Dealer as stated in his order and created the demand on such reasons. Therefore, such demand may be deleted in full.

9. That the Appellant craves to amend, modify, alter, or forego any ground of appeal at any time before or during the appeal.

Prayer :-

In view of all the above facts and circumstances, your Lordship may be please :-

1) To set aside the impugned order of demand dated 29.12.2023 and to direct the Respondent to issue refund of the pre-deposit of 10% of tax along with interest in a time bound manner, or

2) To pass any other order as deem fit.

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Author Bio

I am an Elected Executive Member of Delhi Sales Tax Bar Association, Fellow Member of Institute of Chartered Accountants of India, Law Graduate, Certified Independent Director (MCA), Certified Concurrent Auditor (ICAI), Former Co-opted Member of committee for accounting standards of local bodies(IC View Full Profile

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April 2024