GST Officer Ignores Taxpayer’s Reply – Delhi HC Orders Re-adjudication

Arrow Aircraft Sales and Charters Private Limited Vs Sales Tax Officer (Delhi High Court)

Introduction: In a recent judgment, the Delhi High Court has set aside an order by a GST proper officer against Arrow Aircraft Sales and Charters Private Limited, highlighting the necessity for authorities to thoroughly review taxpayers’ responses. This case underlines the importance of due diligence in the adjudication process under the GST framework.

Detailed Analysis: Arrow Aircraft Sales and Charters Private Limited found itself at odds with the GST department following a Show Cause Notice issued under Section 73 of the Central Goods and Services Tax Act, 2017. The bone of contention was the alleged failure of the taxpayer to provide a satisfactory response, leading to a demand created against Arrow Aircraft by an order dated 31.12.2023. The taxpayer contested this, pointing out that a detailed reply had indeed been submitted, which was seemingly overlooked by the proper officer.

The Delhi High Court, upon reviewing the submissions, noted a significant oversight by the GST proper officer. The court observed that the officer had concluded the proceedings on the premise that “no proper reply/explanation has been received,” without acknowledging the detailed response submitted by Arrow Aircraft. This, according to the court, indicated a lack of consideration of the taxpayer’s reply, which is a critical lapse in the adjudication process.

In setting aside the impugned order, the Delhi High Court remanded the matter back to the GST proper officer for re-adjudication. The court emphasized the need for the officer to assess the taxpayer’s reply on its merits, ensuring a fair and informed decision-making process. This directive underscores the judiciary’s role in ensuring that administrative processes are conducted with due regard to fairness and the principles of natural justice.

Conclusion: The Delhi High Court’s directive for re-adjudication in the case of Arrow Aircraft serves as a crucial reminder of the principles that underpin the GST framework and the broader administrative law. It stresses the importance of a thorough and fair review process, where taxpayers’ submissions are given due consideration. This judgment not only provides relief to Arrow Aircraft but also sets a precedent for future cases, ensuring that the rights of taxpayers are protected in the face of procedural oversights. As GST continues to evolve as a critical component of India’s tax structure, this case highlights the ongoing need for transparency, fairness, and diligence in the administration of tax laws.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

Issue notice. Notice is accepted by learned counsel appearing for the respondent. With the consent of the parties the matter is taken up for hearing today.

2. Petitioner impugns Notification No. 9 of 2023 dated 31.03.2023 whereby the limitation period for exercise of power under Section 73 of the Central Goods and Services Tax Act, 2017 has been extended.

3. Petitioner also impugns order dated 31.12.2023 whereby the proceedings under Section 73 of the Act have been concluded and a demand has been created against the petitioner.

4. Learned counsel for petitioner submits that Show Cause Notice dated 24.09.2023 was received by the petitioner to which a detailed point-wise reply was submitted.

5. It is noticed that the order dated 31.12.2023 records that no proper reply/explanation has been received from the tax-payer despite sufficient and repeated opportunities which indicates that the tax­payer has nothing to say in the matter.

6. The observation in the impugned order dated 31.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply.

7. The proper officer had to at least consider the reply on merits and then form an opinion whether the explanation was sufficient or 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.

8. Accordingly, impugned order dated 31.12.2023 is set aside. The matter is remitted to the proper officer for re-adjudication of the show cause notice issued under Section 73 of the Act within four weeks after giving an opportunity of personal hearing to the petitioner.

9. The challenge to Notification No. 9 of 2023 is left open.

10. The petition is accordingly disposed of in the above terms.