Case Law Details
Shri Krishna Industries Vs Commissioner Delhi Goods And Service Tax And Others (Delhi High Court)
Introduction: The case of Shri Krishna Industries versus Commissioner Delhi Goods and Service Tax and Others, adjudicated by the Delhi High Court, pertains to the proper evaluation of replies by GST officers before forming opinions in demand cases under the Central Goods and Services Tax Act, 2017.
Detailed Analysis: The petitioner challenged an order dated 12.2023, which disposed of a Show Cause Notice dated 23.09.2023, proposing a demand against the petitioner amounting to Rs. 51,64,782.00, including penalty, under Section 73 of the Central Goods and Services Tax Act, 2017.
Despite submitting a detailed reply on 10.10.2023 to the Show Cause Notice, the petitioner contended that the impugned order failed to consider their response adequately. The court noted that the impugned order merely stated the reply as unsatisfactory without providing substantive reasons or seeking further clarifications.
The Delhi High Court criticized the Proper Officer’s failure to evaluate the petitioner’s reply on its merits. It emphasized that the officer should have considered the reply comprehensively before forming an opinion. Moreover, if additional details were required, the officer should have explicitly requested them from the petitioner, which was not evident from the record.
Consequently, the court set aside the impugned order and remitted the matter to the Proper Officer for re-adjudication. It directed the officer to intimate the petitioner about any necessary details or documents required and allow them to furnish explanations accordingly. The Proper Officer was instructed to conduct a fresh adjudication, including a personal hearing, within the prescribed period under Section 75(3) of the Act.
Conclusion: The judgment underscores the importance of procedural fairness and proper evaluation of replies by GST officers in demand cases. It highlights the obligation of officers to consider responses on their merits and provide opportunities for clarification if needed. The directive by the Delhi High Court ensures adherence to principles of natural justice and procedural correctness in GST proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Petitioner impugns order dated 12.2023, whereby the impugned Show Cause Notice dated 23.09.2023, proposing a demand against the petitioner has been disposed and a demand of Rs.51,64,782.00 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 (hereinafter referred to the Act).
2. Learned counsel for Petitioner submits that a detailed reply dated 10.10.2023 was filed to the Show Cause Notice, however, the impugned order dated 28.12.2023 does not take into consideration the reply submitted by the petitioner and is a cryptic order.
3. Perusal of the Show Cause Notice shows that the Department has given separate headings 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, a detailed reply was 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: “And whereas. in response to the DRC-01, the Taxpayer submitted his reply in DRC-06 and the reply of the registered person as well as data available on OST Portal has been checked/examined and the reply/submission of the Taxpayer is not found to be satisfactory.
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Now, since No further additional reply/explaining has been received from the taxpayer despite sufficient and repeated opportunities. which indicate that the taxpayer has nothing to saying the matter. 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.” The Proper Officer has opined that the reply is unsatisfactory.
5. The observation in the impugned order dated 28.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply. Proper officer had to at least consider the reply on merits and then form an opinion whether the reply was not satisfactory. He merely held that the reply is not satisfactory which ex- facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner.
6. Further, if the Proper Officer was of the view that reply was not satisfactory and 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.
7. 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 28.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication.
8. 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. Pursuant to the intimation being given, petitioner shall furnish the requisite explanation and 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.
9. 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.
10. The challenge to Notification No. 9 of 2023 with regard to the initial extension of time is left open.
11. Petition is disposed of in the above terms.
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