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

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 the Show Cause Notice for re-adjudication, directing the officer to examine the ITC TRAN-I reversal claim, provide a personal hearing, and pass a fresh order within the prescribed period. All parties' rights were reserved.

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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.

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