Tax Demand Quashed: Officer Ordered to Reevaluate Evidence, Provide Fair Hearing, and Issue Reasoned Order Under Section 73

HC set aside an order under Section 73 of CGST Act challenging a tax demand of Rs 2.72 crore. The court found the Proper Officer's evaluation of the petitioner's reply inadequate and lacking proper scrutiny. The matter was remitted for re-adjudication, directing the officer to seek necessary details, allow a personal hearing, and issue a fresh speaking order within prescribed timelines.

---

---

Issues involved: Impugned order under Section 73 of the Central Goods and Services Tax Act, 2017; Proper consideration of petitioner's reply; Satisfactory response by Proper Officer; Opportunity for clarification and furnishing documents; Remittal for re-adjudication.

Impugned Order and Petitioner's Submission: The petitioner challenged an order dated 30.12.2023, which disposed of a Show Cause Notice proposing a demand of Rs 2,72,81,448.00 against the petitioner under Section 73 of the CGST Act. The petitioner contended that their detailed reply to the Show Cause Notice was not considered in the impugned order, which was deemed cryptic.

Consideration of Reply: The Show Cause Notice addressed excess claim Input Tax Credit and ITC to be reversed on non-business transactions and exempt supplies. The petitioner provided a detailed reply with full disclosures under each heading. However, the impugned order dismissed the reply as incomplete, unsupported by adequate documents, and unsatisfactory without proper justification, indicating a lack of consideration by the Proper Officer.

Proper Officer's Evaluation: The Proper Officer deemed the petitioner's reply unsatisfactory and incomplete without seeking further details or documents. The Court found this evaluation unsustainable as the reply was detailed, and the Proper Officer failed to apply proper scrutiny or request additional information from the petitioner.

Remittal for Re-Adjudication: Due to the improper evaluation of the petitioner's reply, 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, allow a personal hearing, and issue a fresh speaking order within the prescribed period under Section 75(3) of the Act.

Final Disposition: The Court clarified that it did not comment on the merits of the case and reserved all rights and contentions of the parties. The challenge to Notification No. 9 of 2023 regarding the initial time extension was left open, and the petition was disposed of accordingly.

---