2024 (4) TMI 160 - HC - GST

Tax Credit Dispute: Department's Order Overturned, Case Sent Back for Fair Reassessment of Petitioner's Explanations

Larsen And Toubaro Limited And Passavant Energy And Environment Gmbh JV Versus Commissioner of Delhi Goods And Service Tax And Another

HC found the tax department's order against the petitioner unsustainable due to inadequate evaluation of their reply to a show cause notice regarding ... Violation of principles of natural justice - impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - excess claim Input Tax Credit - under declaration of ineligible ITC - ITC claimed from cancelled dealers - return defaulters and tax nonpayers - HELD THAT:- The observation in the impugned order dated 28.12.2023 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 not satisfactory 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 any 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 order cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 28.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication. Petition disposed off. Issues involved:The judgment involves the challenge to an order u/s 73 of the Central Goods and Services Tax Act, 2017, where a demand with penalty was raised against the Petitioner based on a Show Cause Notice dated 23.09.2023. The main issue was the satisfaction of the reply submitted by the Petitioner in response to the Show Cause Notice.Detailed Summary:The Petitioner challenged an order dated 28.12.2023, which disposed of the Show Cause Notice and raised a demand of Rs. 55,23,524.00 against the Petitioner. The Petitioner contended that their detailed reply dated 18.10.2023 was not considered in the order and was deemed unsatisfactory without proper evaluation. The Department had raised concerns regarding excess claim Input Tax Credit, under declaration of ineligible ITC, and ITC claimed from certain categories of dealers. The Petitioner had provided a detailed reply addressing each of these concerns. However, the impugned order dismissed the reply as unsatisfactory without proper consideration, leading to the challenge before the Court.The Court noted that the Proper Officer had not adequately evaluated the Petitioner's reply before deeming it unsatisfactory. The order lacked a proper analysis of the response provided by the Petitioner and did not demonstrate a thorough consideration of the details furnished. Furthermore, the Court observed that the Proper Officer did not seek further clarification or details from the Petitioner before making a final decision. Consequently, the Court held that the order was unsustainable and remitted the matter back to the Proper Officer for re-adjudication.The Court directed the Proper Officer to communicate any specific details or documents required from the Petitioner for re-evaluation. The Petitioner was instructed to provide the necessary explanations and documents upon receiving such intimation. The Proper Officer was mandated to conduct a fresh adjudication after affording the Petitioner an opportunity for a personal hearing, leading to the issuance of a new order within the prescribed period under Section 75(3) of the Act. The Court clarified that it did not delve into the merits of the parties' contentions and reserved all rights and contentions for future proceedings. Additionally, the Court left open the challenge to Notification No. 9 of 2023 regarding the initial extension of time. Ultimately, the petition was disposed of in the aforementioned terms.