Ex-parte GST Demand Order Quashed: Procedural Flaws Require Fresh Adjudication with Opportunity for Petitioner's Response

HC found the ex-parte demand order under Section 73 of CGST Act unsustainable due to procedural irregularities. The case was remitted to the Proper Officer for re-adjudication, directing the petitioner to file a reply within 30 days and mandating a fresh speaking order after personal hearing. The court preserved all rights and contentions, leaving additional proceedings by GST Intelligence unaffected.

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Issues involved: Impugning an order under Section 73 of the Central Goods and Services Tax Act, 2017, cancellation of GST registration retrospectively, validity of an ex-parte demand raised against the petitioner, issuance of a fresh speaking order after remittance for re-adjudication, and a separate Show Cause Notice issued by the Directorate General of Goods and Services Intelligence.

Impugned Order and Ex-Parte Demand: The petitioner challenged an order disposing of a Show Cause Notice proposing a demand of Rs. 7,56,66,476.00 under Section 73 of the CGST Act. The impugned order created a demand ex-parte due to the taxpayer's failure to respond or appear despite opportunities provided. The Proper Officer concluded that the petitioner had nothing to say in the matter, leading to the demand being raised without a proper adjudication process.

Cancellation of GST Registration: The petitioner's GST registration was cancelled retrospectively, preventing access to the portal as acknowledged by the Department. This raised a valid concern that the petitioner was not served with the Show Cause Notice and subsequent order post the cancellation of registration, impacting the fairness of the proceedings.

Court's Decision and Remittance: The High Court found that the impugned order solely based on the petitioner's non-filing of a reply could not be sustained. Therefore, the matter was remitted to the Proper Officer for re-adjudication. The petitioner was directed to file a reply within 30 days, following which a fresh speaking order was to be passed after a personal hearing, as per Section 75(3) of the Act.

Additional Show Cause Notice: The petitioner's counsel highlighted the issuance of another Show Cause Notice by the Directorate General of Goods and Services Intelligence for the same tax period, emphasizing that the current judgment did not affect the proceedings initiated by the said Directorate, preserving the petitioner's defense in that regard.

Final Disposition and Clarifications: The Court disposed of the petition setting aside the impugned order and remitting the matter for re-adjudication. The Court clarified that it did not delve into the merits of the parties' contentions, keeping all rights and contentions reserved. The challenge to Notification No. 9 of 2023 regarding the initial time extension was left open, concluding the judgment in the above terms.

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