Tax Demand Challenge: Section 73 Order Overturned Due to Procedural Defects, Requiring Comprehensive Reassessment of Rs. 57.11 Crore Claim

HC set aside an order under Section 73 of CGST Act concerning a tax demand of Rs. 57.11 crore. The court found the Proper Officer's dismissal of petitioner's detailed reply inadequate and procedurally flawed. The matter was remitted for fresh adjudication, directing the Proper Officer to seek specific clarifications, conduct a personal hearing, and issue a fresh order within prescribed timelines, while reserving substantive rights of both parties.

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Issues involved: Impugned order disposing of Show Cause Notice under Section 73 of the Central Goods and Services Tax Act, 2017 without considering petitioner's detailed reply.

Summary:
The petitioner challenged an order dated 30.12.2023 disposing of a Show Cause Notice dated 23.09.2023 under Section 73 of the CGST Act, 2017, which raised a demand of Rs. 57,11,36,600.00 against the petitioner. The petitioner contended that their detailed reply to the Show Cause Notice was not considered in the impugned order, which was cryptic in nature.

The Show Cause Notice outlined various issues such as declaration of output tax, excess claim Input Tax Credit (ITC), ineligible ITC, and ITC claimed from certain categories. The petitioner provided a detailed reply addressing each issue. However, the impugned order dismissed the reply as unsatisfactory without proper consideration. The Proper Officer deemed the reply inadequate without a thorough assessment, indicating a lack of due diligence.

The Court found the Proper Officer's assessment unsustainable as the petitioner's reply was detailed and warranted a proper review on its merits. The Court noted that the Proper Officer should have sought further clarification or documents if needed, but no such opportunity was provided to the petitioner. Consequently, the Court set aside the impugned order and remitted the matter for re-adjudication by the Proper Officer.

The Court directed the Proper Officer to communicate any specific details or documents required from the petitioner, who must then provide the necessary explanations and materials. Subsequently, the Proper Officer is instructed to re-examine the Show Cause Notice, conduct a personal hearing, and issue a fresh order within the prescribed timeframe under Section 75(3) of the Act.

The Court clarified that it did not delve into the merits of the parties' arguments and reserved all rights and contentions. Additionally, the challenge to Notification No. 9 of 2023 concerning the initial time extension was left undecided. The petition was disposed of accordingly.

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