Case Law Details
Sandeep Jain Proprietor of M/s Nandi Polychem Vs Union of India (Delhi High Court)
The case of Sandeep Jain, proprietor of M/s Nandi Polychem, against the Union of India Revenue Secretary and others, concerns the denial of Input Tax Credit (ITC) without adequate consideration of the petitioner’s response. The Delhi High Court has intervened to ensure a fair process in this matter.
Detailed Analysis: The petitioner, Sandeep Jain, challenged the order of 30.12.2023, which confirmed a demand of Rs. 10,03,08,628.00 against him under Section 73 of the Central Goods and Services Tax Act, 2017. The petitioner had responded to the show cause notice dated 23.09.2023 with detailed replies on 23.10.2023, 11.12.2023, and 21.12.2023, providing comprehensive disclosures regarding the alleged under-declaration of output tax, excess claim of ITC, and other issues.
However, the impugned order failed to consider the petitioner’s responses adequately. It dismissed the petitioner’s explanations without proper scrutiny, stating that they were incomplete and unsupported by adequate documents. The Proper Officer’s opinion that the reply was unsatisfactory appeared to be based on superficial assessment, neglecting the detailed nature of the petitioner’s submissions.
The Delhi High Court found fault with the impugned order, highlighting the Proper Officer’s failure to consider the petitioner’s reply on its merits. The court emphasized the importance of allowing the petitioner an opportunity to clarify any deficiencies in the response or furnish additional details, which was not provided in this case.
As a result, the Delhi High Court set aside the impugned order and remitted the matter to the Proper Officer for re-adjudication. The Proper Officer was directed to intimate the petitioner about any required details or documents and provide an opportunity for further explanation and documentation within a specified timeframe. The court made it clear that it had not evaluated the merits of the case but intervened to ensure a fair process.
Conclusion: The Delhi High Court’s intervention in the case of Sandeep Jain vs Union of India underscores the importance of procedural fairness in tax matters. By directing re-adjudication and emphasizing the need for proper consideration of the petitioner’s responses, the court ensures that the principles of natural justice are upheld. This decision reaffirms the judiciary’s role in safeguarding the rights of taxpayers and promoting a transparent and accountable tax administration system.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Petitioner impugns order dated 30.12.2023, whereby the show cause notice dated 23.09.2023, proposing a demand against the petitioner has been confirmed and a demand of Rs. 10,03,08,628.00/- 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.
2. Learned counsel for the petitioner submits that a detailed reply dated 20.10.2023 to the show cause notice was filed on 23.10.2023. He further submitted that subsequent to the said reply Petitioner filed a DRC-06 on 11.12.2023, whereby the petitioner had given party-wise details and return filing status. Further, on 21.12.2023 petitioner filed another reply reiterating the submissions made by him on 23.10.2023 and 11.12.2023. However, the impugned order dated 29.12.2023 does not take into consideration the replies submitted by the petitioner and is a cryptic order which merely records that reply was found not satisfactory and devoid of merits.
3. A perusal of the show cause notice shows that the Department has given specific details of alleged under declaration of output tax, 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, detailed replies dated 23.10.2023, 11.12.2023 and 21.12.2023 were 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 “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 incomplete, not duly supported by adequate documents and unable to clarify the issue. Since, the reply filed is not clear and satisfactory, the demand of tax and interest conveyed via DRC-01 is confirmed, with the direction to deposit the amount mentioned in DRC-07 within one month from the date of receipt of this demand notice, failing which recovery proceedings w/s 79 of CGST Act will be initiated and the actions as per law will be initiated without further reference.” The Proper Officer has opined that the reply is unsatisfactory.
5. The observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply.
6. 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 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.
7. Further, if the Proper Officer was of the view that reply is incomplete and further details were required, the same could have been 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.
8. 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 30.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication.
9. As noticed hereinabove, the impugned order records that petitioner has not furnished the requisite details. Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner within a period of one week from today. On such intimation being given, petitioner shall furnish the requisite explanation and documents within one week thereof. Thereafter, the Proper Officer shall re-adjudicate the show cause notice within a period of two weeks after giving an opportunity of personal hearing.
10. 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.
11. The challenge to Notification 9 of 2023 is left open.
12. Petitionis disposed of in the above
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