Tax Demand Order Invalidated: Procedural Lapses Undermine Officer's Decision on Input Tax Credit Claims

HC found the tax demand order invalid due to procedural defects. The Proper Officer failed to provide personal hearing and adequately consider the petitioner's reply regarding Input Tax Credit discrepancies. Court set aside the order, directing re-adjudication with proper opportunity for explanation and document submission, while preserving both parties' substantive rights.

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Issues involved:
The judgment involves the challenge to an order raising a demand against the petitioner under Section 73 of the Central Goods and Services Tax Act, 2017, based on a Show Cause Notice regarding discrepancies in Input Tax Credit (ITC) without providing a personal hearing to the petitioner.

Details of the Judgment:

Issue 1: Lack of Personal Hearing in Show Cause Notice
The petitioner challenges an order raising a demand of Rs. 4,70,512.00, contending that a previous Show Cause Notice did not provide a personal hearing opportunity despite discrepancies in ITC being highlighted. The petitioner submitted a detailed reply explaining the excess ITC claim but was not given a chance for a personal hearing.

Issue 2: Inadequate Consideration of Petitioner's Reply
The petitioner filed a detailed reply to a subsequent Show Cause Notice, but the impugned order did not consider this reply adequately. The order deemed the reply unsatisfactory without proper examination, leading the Court to conclude that the Proper Officer did not apply his mind to the petitioner's submission.

Issue 3: Lack of Opportunity for Further Clarification
The Court found that the Proper Officer did not seek further details or clarification from the petitioner if the reply was deemed unsatisfactory. The absence of a specific opportunity for the petitioner to provide additional information rendered the order unsustainable.

Conclusion:
The Court set aside the impugned order and remitted the matter to the Proper Officer for re-adjudication. The Proper Officer was directed to request necessary details/documents from the petitioner, who must then furnish explanations and documents. A fresh speaking order with a personal hearing opportunity should be passed within the prescribed period. The Court clarified that it did not assess the merits of the parties' contentions, preserving their rights and contentions. The petition was disposed of accordingly.

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