2023 (9) TMI 956 - HC - GST

Tax Orders Overturned: Procedural Flaws Invalidate Deputy Commissioner's Ruling, Mandating Comprehensive Reconsideration

M/s. Savvy Fabrics Versus Union of India & Ors.

The HC found merit in the petitioner's challenge to tax orders, identifying procedural defects in the deputy commissioner's ruling. The court set aside ... Validity of SCN issued under Section 74 of the Maharashtra Goods and Service Tax / Central Goods and Service Tax Act, 2017 - impugned order does not record any reasons/findings in regard to such contentions as urged by the Petitioner - HELD THAT:- It is clearly seen in the paragraph titled “findings”, that none of the contentions as urged by the Petitioner are recorded as also there is no discussion whatsoever on the issues as raised by the Petitioner. This more particularly, when the impugned order raises a demand against the Petitioner on interest payable under Section 50(3) of the CGST Act, 2017 as also a penalty being imposed under Section 122 of the CGST/SGST Act, 2017 read with Section 73(9) of the CGST/SGST Act, 2017. It is also the case of the petitioner that in the show cause notice, there was no invocation of the provisions of Section 122 in regard to the penalty. On such contentions, learned counsel for the petitioner would submit that the order impugned is defective and illegal on the ground that it records no reasons hence it would be an order without application of mind. The orders dated 18th January 2023 as impugned in both the writ petitions as passed by the Deputy Commissioner, Sales Tax are quashed and set aside with liberty to the Department to issue a fresh show cause notice to the petitioner within a period of four weeks from today - Petition disposed off. Petitions under Article 226 challenge the adjudication dated 18 January 2023 arising from a show cause notice issued under Section 74 of the CGST/SGST Act. The impugned order's 'findings' omit any discussion of the petitioner's detailed reply and the personal hearing, and the order raises demand for interest under Section 50(3) and imposes penalty under Section 122 read with Section 73(9). It was noted that Section 122 was not specifically invoked in the show cause notice. The omission to record reasons renders the order akin to an 'order without application of mind.' The revenue conceded that, in the peculiar facts, the order should be set aside and the Department permitted to issue a fresh show cause notice. The orders dated 18 January 2023 are quashed and set aside; liberty granted to issue fresh show cause notice within four weeks; any such notice shall be adjudicated 'in accordance with law' after considering the petitioner's reply and granting a personal hearing. 'All contentions of the parties on the proposed proceedings are expressly kept open.' Designated Officer must pass a fresh order with appropriate reasons.