2024 (5) TMI 551 - HC - GST

Tax Demand Order Overturned: Officer Must Reconsider ITC TRAN-I Claim with Proper Hearing and Detailed Examination

Chemrow India Private Limited Through Its Director Versus Commissioner of Delhi Goods And Service Tax And Others

The HC set aside the tax demand order against the petitioner, finding the Proper Officer did not adequately consider the detailed reply. The SC remitted ... Violation of principles of natural justice - the impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order - duplication of ITC - HELD THAT:- It is noticed that in the reply dated 10.10.2023 petitioner had taken a plea on the duplication of Input Tax Credit (ITC) amounting to Rs. 91,96,278.00/-. However, there is no consideration of the reply filed by the petitioner in the first instance and in the consequent rectification order dated 30.03.2024, a mere adjustment has been granted to the demand earlier raised. Therefore, the observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the reply dated 10.10.2023 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is incomplete, not duly supported by adequate documents and unable to clarify the issue 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 impugned order dated 30.12.2023 cannot be sustained and is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication - Petition disposed off by way of remand. Issues:The judgment involves the impugning of an order and a rectification order u/s 73 of the Central Goods and Services Tax Act, 2017, regarding a demand raised against the petitioner.Impugned Order and Rectification:The petitioner challenged the order dated 30.12.2023 disposing of the Show Cause Notice proposing a demand of Rs. 1,84,49,974.00 against the petitioner. The order raised a demand including penalty u/s 73 of the Act. Additionally, the rectification order dated 30.03.2024 raised a demand of Rs. 1,01,28,145.00 against the petitioner.Consideration of Petitioner's Reply:The petitioner submitted a detailed reply dated 10.10.2023 to the Show Cause Notice. However, the impugned order dated 30.12.2023 did not consider the petitioner's reply, deeming it incomplete and not supported by adequate documents, which the Proper Officer opined as unable to clarify the issue.Contentions and Observations:The Show Cause Notice outlined reasons for the demand, including issues related to output tax, Input Tax Credit (ITC), ineligible ITC, and ITC from specific sources. The petitioner's detailed reply addressed each issue with supporting documents. The petitioner's plea regarding the duplication of ITC was not considered in the initial order or the subsequent rectification order.Court's Decision:The Court found the Proper Officer did not properly consider the petitioner's detailed reply and set aside the impugned order dated 30.12.2023. The Show Cause Notice was remitted for re-adjudication, with instructions for the Proper Officer to examine the petitioner's contention about the reversal of erroneously availed ITC TRAN-I.Further Proceedings:The petitioner was granted 30 days to file a further reply to the Show Cause Notice. The Proper Officer was directed to re-adjudicate the matter, provide a personal hearing opportunity, and pass a fresh speaking order within the prescribed period under Section 75(3) of the Act.Clarification and Conclusion:The Court clarified that it did not comment on the merits of the parties' contentions. All rights and contentions were reserved. The challenge to Notification No. 9/2023 regarding the initial extension of time was left open, and the petition was disposed of accordingly.