2024 (2) TMI 802 - HC - GST

Tax Demand Order Invalidated Due to Procedural Lapses, Remanded for Proper Hearing and Comprehensive Review of Evidence

GAC Shipping India Private Ltd. Versus The Sales Tax Officer Class II Delhi

HC found procedural defects in tax demand order. The court set aside the show cause notice due to lack of proper hearing opportunity and insufficient ... Excess claim of Input Tax Credit - no intimation of hearing was given to the petitioner - cryptic order giving no reasons - Violation of principles of natural justice - HELD THAT:- A perusal of the show cause notice shows that the Department has given specific details of alleged under declaration of output tax, 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 dated 18.10.2023 along with Form GST DRC-06 dated 19.10.2023 was furnished by the petitioner giving full disclosures under each of the heads. In case the Proper Officer was of the view that reply is incomplete and further details were required, the same could have been 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 - It is noted that hearing was fixed on 07.11.2023, which was prior to the reply furnished by the petitioner. Further, petitioner was not provided with an adequate opportunity to defend the show cause notice by way of hearing. The order cannot be sustained and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order and show cause notice is set aside. The matter is remitted to the Proper Officer for re-adjudication - Petition allowed by way of remand. Issues involved:The judgment involves the challenge to an order confirming a demand under Section 73 of the Central Goods and Services Tax Act, 2017, based on a show cause notice.Impugned Order and Lack of Reasons:The petitioner challenged the order for lack of reasons and failure to provide an opportunity for a hearing. The order merely stated that the petitioner's reply was unsatisfactory without providing detailed explanations.Show Cause Notice and Reply:The Department detailed the alleged under declaration of output tax, excess claim Input Tax Credit, and other issues in the show cause notice. The petitioner submitted a detailed reply along with necessary disclosures.Procedural Irregularities:The court noted that the petitioner was not given a proper opportunity to defend the show cause notice. The hearing was scheduled before the petitioner submitted the reply, and no further opportunity was provided to clarify or furnish additional details.Remittal for Re-adjudication:The court held that the order could not be sustained due to procedural shortcomings and remitted the matter to the Proper Officer for re-adjudication. The impugned order and show cause notice were set aside for re-examination.Directions for Re-adjudication:The Proper Officer was directed to provide specific details/documents required from the petitioner within a week. The petitioner was instructed to furnish the necessary explanation and documents within a week of receiving the intimation. The re-adjudication process was to be completed within two weeks after a new opportunity for a hearing.Reservations and Clarifications:The court clarified that it had not evaluated the merits of the parties' contentions and reserved all rights and contentions for both parties. All parties' rights and contentions were preserved for future proceedings.This summary provides a comprehensive overview of the judgment, highlighting the issues, procedural irregularities, and the court's directions for re-adjudication without delving into the specific names or details of the parties involved.