2024 (3) TMI 322 - HC - GST

GST Demand Order Invalidated: Procedural Flaws Render Notice Void, Requiring Comprehensive Reconsideration of Taxpayer's Arguments

Deepak Khandelwal Proprietor M/s. Shri Shyam Metal Versus The Union Of India & Anr.

HC set aside GST demand order due to procedural irregularities. The order was quashed for failing to consider petitioner's detailed replies, lacking ... Violation of principles of natural justice - petitioner was not provided with an adequate opportunity to defend SCN - 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 - HELD THAT:- The impugned order, however, after recording the narration, records that the reply uploaded by the taxpayer is not satisfactory. It merely states that “And whereas, after analyzing, examining and evaluating the reply filed by the taxpayer and details available, as on date on the GST portal, reply of the taxpayer is found to be vague and miserably fails to counter the demands mentioned in the DRC-01.” In case the GST Officer was of the view that reply was vague or 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 - Further petitioner was not provided with an adequate opportunity to defend the show cause notice by way of a hearing. The impugned order records that petitioner has not furnished the requisite details. The GST Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner and petitioner shall furnish the same - Impugned order set aside - matter is remitted to the GST Officer for re-adjudication after giving an opportunity of personal hearing. Issues involved: Impugning of order under Section 73 of the Central Goods and Services Tax Act, 2017 without considering detailed replies, contravention of time period extension notification, lack of opportunity for personal hearing.Impugned Order Analysis: The petitioner challenged the order dated 29.12.2023, which confirmed a demand against them along with a penalty, based on a Show Cause Notice from 23.09.2023 under Section 73 of the CGST Act. The petitioner contended that their detailed replies were disregarded in the cryptic order without addressing their submissions, and argued that the time extension under a notification from 31.03.2023 violated Section 168A of the Act.Show Cause Notice Response: The Department provided specific details in the show cause notice regarding alleged under-declaration of output tax, excess claim of Input Tax Credit (ITC), and other related issues. The petitioner submitted detailed responses under each of the mentioned heads, giving full particulars in their defense.Deficiency in Impugned Order: Despite the detailed responses provided by the petitioner, the impugned order dismissed their submissions as unsatisfactory without proper consideration. It was noted that the order found the reply to be vague and failing to counter the demands mentioned in the notice, without seeking further clarification or documents from the petitioner.Lack of Opportunity for Hearing: The petitioner was not afforded a sufficient opportunity to defend against the show cause notice through a personal hearing, which is a procedural requirement for such matters.Court Decision and Directions: The High Court set aside the impugned order and the show cause notice, remitting the matter back to the GST Officer for re-adjudication with the provision of a personal hearing for the petitioner. The GST Officer was directed to communicate the necessary details/documents required from the petitioner for a fair re-examination.Future Course of Action: The Court left open the issue raised by the petitioner regarding the notification from 31.03.2023 potentially conflicting with Section 168A of the Act. The petitioner was granted the liberty to challenge any further orders in accordance with the law and to raise concerns about the validity of the notification if necessary.