Case Law Details
Kalpatru Projects International Limited Vs Goods And Service Tax Officer (Delhi High Court)
In the case of Kalpatru Projects International Limited versus Goods and Service Tax Officer, the petitioner contested an order dated 28.12.2023, which disposed of a Show Cause Notice dated 24.09.2023. This notice proposed a substantial demand of Rs. 7,86,84,337.00 against the petitioner under Section 73 of the Central Goods and Services Tax Act, 2017. The petitioner argued that despite submitting a detailed reply on 07.11.2023, the impugned order failed to consider their response adequately.
The Show Cause Notice encompassed various issues, including under-declaration of output tax, excess claim of Input Tax Credit (ITC), and scrutiny of ITC availed from different sources. The petitioner provided comprehensive disclosures under each of these heads in their reply to the notice. However, the impugned order, after acknowledging the submission, dismissed it summarily, stating that the reply was not satisfactory. The order further indicated that no further additional reply or explanation was received from the taxpayer, leading to a demand ex-parte.
The petitioner contended that their reply was detailed and accompanied by supporting documents. They argued that the Proper Officer should have considered their response on its merits rather than dismissing it outright. Moreover, they highlighted the lack of opportunity to provide further details or documents if deemed necessary by the Proper Officer.
The court agreed with the petitioner’s argument, noting that the Proper Officer had not adequately examined the petitioner’s reply. The court emphasized that the Proper Officer should have at least considered the reply on its merits before forming an opinion. Additionally, if further information was required, the Proper Officer should have explicitly requested it from the petitioner, which was not evident from the record.
Consequently, the court set aside the impugned order dated 28.12.2023 and remitted the matter to the Proper Officer for re-adjudication. The petitioner was instructed to file a reply to the Show Cause Notice within 30 days, after which the Proper Officer would re-adjudicate the matter, providing the petitioner with an opportunity for a personal hearing. The Proper Officer was directed to pass a fresh speaking order in accordance with the law within the prescribed period under Section 75(3) of the Act.
The court clarified that its decision neither delved into nor commented upon the merits of the contentions raised by either party. All rights and contentions of the parties were preserved for further proceedings. Additionally, the challenge to Notification No. 9 of 2023 regarding the initial extension of time was left open for consideration.
In summary, the Delhi High Court found merit in the petitioner’s argument that the Proper Officer had not adequately considered their detailed reply before issuing the impugned order. As a result, the court set aside the order and directed the matter to be re-adjudicated, giving the petitioner an opportunity to present their case properly.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Petitioner impugns order dated 28.12.2023, whereby the impugned Show Cause Notice dated 24.09.2023, proposing a demand of Rs. 7,86,84,337.00 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. With the consent of the parties, petition is taken up for final disposal today.
3. Learned counsel for Petitioner submits that Petitioner had filed a detailed reply dated 07.11.2023, however, the impugned order dated 28.12.2023 does not take into consideration the reply submitted by the Petitioner and is a cryptic order.
4. Perusal of the Show Cause Notice dated 24.09.2023 shows that the Department has given separate headings i.e., under declaration of output tax; excess claim of Input Tax Credit [“ITC”]; scrutiny of ITC availed, and ITC claimed from cancelled dealers, return defaulters and tax nonpayers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving disclosures under each of the heads.
5. The impugned order, however, after recording the narration records that the reply uploaded by the taxpayer is not found to be satisfactory. It 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 GST Portal has been checked/examined and the reply/submission of the Taxpayer is not found to be satisfactory. **** Now, since No further additional reply/explanation has been received from the taxpayer despite sufficient and repeated opportunities, which indicate that the taxpayer has nothing to say in the matter. In view of aforesaid circumstances, the undersigned is left with no other option to create demand ex-pane, in accordance with the provisions of CGST/ DGST Act & Rules, 2017.” The Proper Officer has opined that the reply is not found to be satisfactory and since no further additional reply/explanation has been received from the taxpayer a demand ex-parte is being created.
6. The observation in the impugned order dated 28.12.2023 is not sustainable for the reasons that the reply dated 07.11.2023 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 found to be satisfactory, 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 or documents 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.
8. In view of the above, impugned order dated 28.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, impugned order dated 28.12.2023 is set aside and the matter is remitted to the Proper Officer for re-adjudication.
9. 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.
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 with regard to the initial extension of time is left open.
12. Petition is disposed of in the above terms.
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