GST Show Cause Notice Quashed: Insufficient Evidence and Improper Investigation Invalidate Proceedings Under Section 73(1)

HC allowed appeal challenging GST show cause notice under section 73(1). Court found notice issued without proper investigation and lacking substantive evidence. Appellants' detailed replies were not adequately considered. Notice was set aside and matter remanded for fresh inquiry, ensuring supplier-side investigation and providing opportunity for personal hearing before issuing renewed notice.

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Issues involved: Challenge to show cause notice under section 73(1) of the CGST Act, 2017.

Summary:

Issue 1: Challenge to show cause notice

The intra-Court appeal was against an order directing the appellants to reply to a show cause notice dated 16th August, 2023 under section 73(1) of the CGST Act, 2017. The Court interfered with the notice due to vague allegations and lack of effective reply opportunity.

Issue 2: Allegations and replies

The appellants were accused of availing input tax credit on supplies with retrospectively cancelled registration and claiming credit from suppliers who did not file returns. The appellants submitted detailed replies, requested investigations at the supplier's end, and sought a personal hearing.

Issue 3: Lack of due application of mind

The Court found that the show cause notice dated 16th August, 2023 was issued without proper consideration of the appellants' replies to the pre-show cause notice. The authority failed to investigate at the supplier's end, leading to the notice being set aside.

Issue 4: Legal precedents and interference

The appellants cited a similar case where the Court set aside orders due to similar circumstances. The Court allowed the appeal, set aside the show cause notice, and remanded the matter back to the adjudicating authority for further investigation and decision-making.

Conclusion:

The appeal was allowed, the writ petition was allowed, and the show cause notice dated 16th August, 2023 was set aside. The matter was remanded for proper inquiry from the supplier's end, allowing further submissions and a personal hearing before deciding on issuing a show cause notice under section 73(1) of the Act.

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