Tax Demand Order Quashed: Procedural Flaws Invalidate Assessment Due to Insufficient Hearing and Defense Opportunity

HC found the tax demand order invalid due to procedural irregularities. The court determined that the tax authority did not adequately consider the petitioner's reply to the show cause notice and failed to provide sufficient opportunity for defense. The matter was remitted for re-adjudication, with specific directions for the Proper Officer to grant a hearing and allow submission of additional documents within prescribed timelines.

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Issues involved: Impugning an order under Section 73 of the Central Goods and Services Tax Act, 2017 for confirming a demand against the petitioner.

Summary of the Judgment:

Issue 1: Consideration of petitioner's reply to show cause notice
The petitioner challenged an order confirming a demand against them, arguing that their detailed reply to the show cause notice was not considered. The Court noted that the show cause notice provided specific details of alleged tax discrepancies, to which the petitioner had responded with full disclosures. However, the impugned order deemed the reply unsatisfactory without giving the petitioner an opportunity to clarify or provide further details. The Court held that the order was unsustainable due to lack of proper consideration of the petitioner's response and remitted the matter for re-adjudication.

Issue 2: Adequate opportunity for defense
The petitioner also contended that they were not given a sufficient opportunity to defend the show cause notice through a hearing. The Court found merit in this argument and set aside the impugned order, directing the Proper Officer to provide the petitioner with necessary details/documents to be furnished within a week. The petitioner was granted one week to submit the required explanation and documents, following which the Proper Officer was instructed to re-adjudicate the show cause notice within two weeks after granting an opportunity for a hearing.

Conclusion
The Court clarified that it did not delve into the merits of the parties' contentions and reserved all rights and contentions. The order was directed to be given dasti under the signatures of the Court Master for further action.

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