Case Law Details
Surinder Kumar Garg Vs Union of India Revenue Secretary (Delhi High Court)
In a recent judgment, the Delhi High Court ruled on the case of Surinder Kumar Garg versus the Union of India Revenue Secretary, highlighting the necessity for proper consideration of responses in matters concerning the Goods and Services Tax (GST) regime.
The petitioner contested an order dated 31st December 2023, which disposed of a Show Cause Notice issued on 26th September 2023, proposing a substantial demand against the petitioner under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act).
Upon examination of the case, the High Court noted several crucial points:
1. Petitioner’s Response: The petitioner had submitted a detailed reply dated 26th October 2023, addressing the various issues raised in the Show Cause Notice. The response meticulously covered the concerns outlined by the tax authorities.
2. Insufficient Order: Despite the comprehensive nature of the petitioner’s reply, the impugned order of 31st December 2023 dismissed the response as insufficient and unsatisfactory. The order lacked adequate reasoning to justify this conclusion.
3. Proper Officer’s Obligation: The court emphasized that the Proper Officer had a duty to thoroughly consider the petitioner’s response before forming an opinion. Mere dismissal without substantive review indicated a failure on the part of the tax authority to fulfill its responsibilities.
4. Opportunity for Clarification: If the Proper Officer deemed further details necessary, they should have explicitly requested the petitioner to provide additional information. However, no such opportunity was extended in this case, raising questions about procedural fairness.
In light of these observations, the Delhi High Court concluded that the impugned order could not be upheld. It ordered the matter to be remitted to the Proper Officer for re-adjudication, emphasizing the importance of due process and proper consideration of submissions.
The court directed the petitioner to file a reply to the Show Cause Notice within 30 days and instructed the Proper Officer to re-adjudicate the matter, providing an opportunity for a personal hearing and issuing a fresh speaking order within the prescribed period under Section 75(3) of the CGST Act.
Importantly, the court clarified that its decision neither implied nor commented on the merits of the parties’ contentions, leaving all rights and contentions reserved for future proceedings.
Additionally, the High Court left open the challenge to Notification No. 9 of 2023 concerning the initial extension of time, ensuring that all relevant aspects of the case could be addressed in subsequent proceedings.
In summary, the judgment underscores the significance of procedural fairness and thorough consideration of responses in GST matters, highlighting the obligation of tax authorities to provide reasoned decisions based on a careful examination of the facts and submissions presented before them.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Petitioner impugns order dated 31.12.2023, whereby the impugned Show Cause Notice dated 26.09.2023, proposing a demand of Rs.2,60,20,062.00 against the Petitioner has been disposed of and a demand 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. Issue notice. Notice is accepted by learned counsel appearing for respondent.
3. With the consent of the parties, petition is taken up for final disposal today.
4. Learned counsel for Petitioner submits that Petitioner had filed a detailed reply dated 26.10.2023, however, the impugned order dated 31.12.2023 does not take into consideration the reply submitted by the Petitioner and is a cryptic order.
5. Perusal of the Show Cause Notice dated 26.09.2023 shows that the Department has given separate headings i.e., excess claim of Input Tax Credit [“ITC”]; under declaration of ineligible ITC and ITC claimed from cancelled dealers, return defaulters and tax non payers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving disclosures under each of the heads.
6. The impugned order, however, after recording the narration records that the reply uploaded by the taxpayer is insufficient and unsatisfactory. It states that “And whereas, it is noticed that the Taxpayer has submitted his/her reply and the same is not found satisfactory. And whereas, after going through the contents of the SCN explained therein, it has been evident that the taxpayer has not replied properly.” The Proper Officer has opined that the reply is insufficient and unsatisfactory.
7. The observation in the impugned order dated 31.12.2023 is not sustainable for the reasons that the reply dated 26.10.2023 filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is unsatisfactory, which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner.
8. Further, if the Proper Officer was of the view that any 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.
9. In view of the above, the impugned order dated 31.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 31.12.2023 is set aside and the matter is remitted to the Proper Officer for re-adjudication.
10. Petitioner shall file a 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.
11. 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.
12. The challenge to Notification No. 9 of 2023 with regard to the initial extension of time is left open.
13. Petition is disposed of in the above terms.
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