Tax Demand Order Quashed: Procedural Lapses Invalidate Assessment Under Section 73 of CGST Act

HC set aside tax demand order under Section 73 of CGST Act due to procedural irregularities. The court found the proper officer failed to adequately consider the petitioner's detailed reply and did not provide sufficient opportunity to clarify submissions. Matter remitted for re-adjudication with directions to issue a fresh speaking order and allow personal hearing within prescribed timelines.

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Issues involved: Impugned order under Section 73 of CGST Act, 2017

The petitioner challenged an order dated 28.12.2023, which disposed of a Show Cause Notice proposing a demand of Rs. 34,51,018.00 under Section 73 of the Central Goods and Services Tax Act, 2017. The petitioner contended that the order did not consider the detailed reply submitted earlier and raised a demand including penalty against the petitioner.

Details of the Judgment:

The petitioner had filed a detailed reply dated 11.10.2023, but the impugned order dated 26.12.2023 did not take it into consideration, leading to the petitioner's dissatisfaction. The petitioner's Chartered Accountant had tendered documents to the proper officer, but they were declined, prompting a request for an opportunity to submit a further reply with supporting documents.

The Show Cause Notice dated 24.09.2023 outlined various issues such as declaration of output tax, tax on outward supplies, excess claim Input Tax Credit (ITC), and scrutiny of ITC availed. The petitioner provided a detailed reply addressing each of these issues. However, the impugned order deemed the reply unsatisfactory without proper consideration.

The Court found that the Proper Officer did not adequately consider the detailed reply submitted by the petitioner. The order failed to demonstrate that the Proper Officer had applied his mind to the petitioner's submissions. Moreover, no opportunity was given to the petitioner to clarify or provide further details as needed.

Consequently, the impugned order dated 28.12.2023 was set aside, and the matter was remitted to the Proper Officer for re-adjudication. The petitioner was directed to file a reply to the Show Cause Notice within one week for re-adjudication, including an opportunity for a personal hearing and a fresh speaking order in accordance with the law.

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

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