2024 (3) TMI 1026 - HC - GST

Procedural Lapses Invalidate Tax Assessment: Officer Directed to Reconsider Case with Proper Notice and Opportunity

HC set aside the order under Section 73 of CGST Act due to procedural deficiencies. The Proper Officer failed to adequately consider the petitioner's ... Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the petitioner and is a cryptic order - HELD THAT:- The observation in the impugned order dated 29.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion whether the reply was unsatisfactory. He merely held that the reply is unsatisfactory which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner - Further, if the Proper Officer was of the view that the reply is unsatisfactory and further details were required, the same could have been specifically 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. The impugned order records that petitioner’s reply is not satisfactory. Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner. Pursuant to the intimation being given, petitioner shall furnish the requisite explanation and documents - the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 29.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication. Petition disposed off by way of remand. Issues:The judgment involves the challenge against an order under Section 73 of the Central Goods and Services Tax Act, 2017, where a demand of Rs. 36,60,531.00 including penalty was raised against the petitioner based on a Show Cause Notice dated 01.12.2023.Detailed Summary:1. Consideration of Petitioner's Reply:The petitioner challenged the order dated 29.12.2023, arguing that their detailed reply to the Show Cause Notice was not considered, leading to a cryptic order. The Department had received a comprehensive reply from the petitioner addressing all the separate headings in the Show Cause Notice, but the impugned order deemed the reply unsatisfactory without proper evaluation.2. Unsatisfactory Order:The impugned order simply stated that the petitioner's reply was unsatisfactory without providing specific reasons or requesting further details. This lack of detailed assessment by the Proper Officer indicated a failure to apply proper scrutiny to the petitioner's response, which rendered the order unsustainable.3. Lack of Opportunity for Clarification:The petitioner contended that if the Proper Officer found the reply unsatisfactory and needed additional information, they should have explicitly asked for it. However, no such opportunity was given to the petitioner to clarify or supplement their response, highlighting a procedural flaw in the adjudication process.4. Remittal for Re-adjudication:Given the deficiencies in the impugned order, the Court set aside the order dated 29.12.2023 and remitted the matter to the Proper Officer for re-adjudication. The Proper Officer was directed to communicate the specific details or documents required from the petitioner for a thorough re-examination.5. Fresh Adjudication Process:The Proper Officer was instructed to allow the petitioner to provide the necessary explanations and documents upon receiving the intimation. Subsequently, a fresh speaking order was to be passed after affording the petitioner an opportunity for a personal hearing, in compliance with the statutory timeline under Section 75(3) of the Act.6. Reservation of Rights:The Court clarified that it did not delve into the merits of the parties' contentions and reserved all rights and contentions for future consideration. Additionally, the challenge to Notification No. 9 of 2023 regarding the initial time extension was left open for further review.7. Disposal of Petition:Ultimately, the petition was disposed of with the aforementioned directions for re-adjudication, emphasizing the need for a more thorough and reasoned assessment of the petitioner's response to the Show Cause Notice.