Case Law Details
Sethia Enterprises Vs Commissioner Delhi Goods And Service Tax And Others (Delhi High Court)
In the case of Sethia Enterprises vs. Commissioner Delhi Goods and Service Tax and Others, the Delhi High Court reviewed a petition challenging an order dated April 24, 2024, which disposed of a Show Cause Notice (SCN) dated December 12, 2023. The SCN proposed a tax demand of ₹12,42,094 against the petitioner under Section 73 of the Central Goods and Services Tax (CGST) Act, 2017. The petitioner argued that despite submitting a detailed reply on January 12, 2024, the impugned order failed to consider their response and was deemed cryptic.
The court issued a notice for the case, which was accepted by the counsel for the respondents, and proceeded with the final disposal of the petition. The petitioner’s counsel contended that the reply to the SCN, which included responses to various issues such as discrepancies in declared turnovers, reconciliation of GSTR-01 with GSTR-3B, and claims of Input Tax Credit (ITC), was detailed and supported by documents. However, the impugned order merely noted that the reply was unsatisfactory due to insufficient documentation and did not provide any substantive reasoning.
Upon examining the case, the court found that the impugned order had not adequately addressed the detailed reply submitted by the petitioner. The order was criticized for stating that the taxpayer did not provide sufficient documents without specifying what was lacking. Furthermore, it was noted that although the petitioner had not appeared for a personal hearing initially, another opportunity for a hearing was provided, which the petitioner did not attend. Despite this, the court observed that the Proper Officer should have given the petitioner a chance to clarify or provide additional documents if needed.
The court concluded that the Proper Officer did not apply his mind to the detailed reply and supporting documents submitted by the petitioner. It held that the observation that the reply was unsatisfactory due to insufficient documentation was unsustainable, given that the petitioner had provided a comprehensive response. Additionally, the Proper Officer had not given the petitioner a specific opportunity to furnish any further details that might have been required.
As a result, the impugned order dated April 24, 2024, was set aside. The court remitted the SCN to the Proper Officer for re-adjudication. The petitioner was allowed to file an additional reply to the SCN within 30 days from the court’s order. The Proper Officer was directed to re-adjudicate the SCN, offer the petitioner a personal hearing opportunity, and pass a fresh speaking order in accordance with the law within the timeframe prescribed under Section 75(3) of the CGST Act.
The court clarified that it did not comment on the merits of the contentions of either party, leaving all rights and contentions reserved. The challenge to Notification Nos. 9 of 2023 and 56 of 2023 regarding the extension of time was left open. The petition was disposed of based on these terms, ensuring that due process was followed, and the petitioner’s detailed reply was adequately considered in the re-adjudication process.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
Petitioner impugns order dated 24.04.2024 whereby the impugned Show Cause Notice dated 12.12.2023, proposing a demand of Rs. 12,42,094.00/- against the petitioner has been disposed of and a demand including penalty has been created 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. Issue notice. Notice is accepted by learned counsel appearing for With the consent of the parties, the petition is taken up for final disposal today.
3. Learned counsel for Petitioner submits that Petitioner had filed a detailed reply dated 12.01.2024, however, the impugned order dated 04.2024 does not take into consideration the reply submitted by the Petitioner and is a cryptic order.
4. Perusal of the Show Cause Notice dated 12.12.2023 shows that the Department has raised grounds under separate headings i.e., net tax under declared due to non-reconciliation of turnovers in other returns and E-way bill information; reconciliation of GSTR-01 with GSTR 3-B; excess claim of Input Tax Credit [“ITC”]; the excess input tax credit (ITC) claimed on account of non-reconciliation of information declared in GSTR-3B and Excess ITC availed in GSTR-3B compared to the tax on inward supplies declared by suppliers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving response under each of the heads with supporting documents.
5. The impugned order, however, after recording the narration records that the reply uploaded by the taxpayer is not satisfactory as the taxpayer has not attached sufficient documents in support of his reply. It states that
“And whereas, it is noticed that the Taxpayer filed reply/explanation within stipulated period and did not appear for Personal Hearing before Proper Officer on the given date and time, Further, another opportunity to submit reply and for the sake of natural justice opportunity for Personal Hearing, as per provision of Section 75(4) DGST Act, was also provided to the taxpayer by issuing “REMINDER” through the GST portal.**** Now, since no satisfactory explanation has been received from the taxpayer despite sufficient and repeated opportunities, which indicate that the taxpayer has nothing to say in the matter. The Section 155 of the CGST Act, 2017 provides that the burden of proof for availing input tax credit shall lie on the claimant which reads as “Where any person claims that he is eligible for input tax credit under this Act, the burden of proving such claims shall lie on such person.” The taxpayer has not attached sufficient documents in support of his reply i.e. invoices, proof of payment etc. Hence, in view of aforesaid circumstances, the undersigned is left with no other option to create demand ex-parte, in accordance with the provisions of CGST / DGST Act & Rules, 2017, as per discrepancies already conveyed through SCN/ DRC-01.” The Proper Officer has opined that the reply is not satisfactory and Petitioner has not attached sufficient documents in support of his reply i.e. invoices, proof of payment etc.
6. The observation in the impugned order dated 24.04.2024 is not sustainable for the reasons that the reply dated 12.01.2024 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not satisfactory and taxpayer has not attached sufficient documents in support of his reply which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner.
7. Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the 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 impugned order dated 24.04.2024 cannot be sustained and is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication.
9. Petitioner may file a further reply to the Show Cause Notice within a period of 30 days from today. 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.
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 No. 9 of 2023 and 56 of 2023 with regard to the extension of time is left open.
12. Petition is disposed of in the above terms.
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