Tax Department's Order Under Section 73 Quashed Due to Procedural Lapses and Insufficient Consideration of Evidence

HC found the tax department's order under Section 73 of GST Act unsustainable. The Proper Officer failed to adequately consider the petitioner's detailed reply and supporting documents. The impugned order was set aside, with the Show Cause Notice remitted for re-adjudication. The petitioner was granted 30 days to file a further reply, and the Proper Officer was directed to provide a personal hearing and pass a fresh speaking order.

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Issues involved:
The impugned order under Section 73 of the Central Goods and Services Tax Act, 2017; Proper Officer's consideration of petitioner's reply; Adequacy of documents and clarification in the reply.

Impugned Order under Section 73:
The petitioner challenged an order disposing of a Show Cause Notice proposing a demand of Rs. 5,04,98,487.00 against them under Section 73 of the Central Goods and Services Tax Act, 2017.

Consideration of Petitioner's Reply:
The petitioner contended that their detailed reply dated 25.10.2023 was not considered in the impugned order dated 29.12.2023, which was deemed cryptic by the petitioner's counsel.

Adequacy of Documents and Clarification in Reply:
The Department issued a Show Cause Notice detailing reasons for the demand, to which the petitioner responded comprehensively under each heading with supporting documents. However, the impugned order found the reply incomplete, unsatisfactory, and lacking adequate documents to clarify the issues raised.

The court noted that the impugned order failed to consider the detailed reply with supporting documents submitted by the petitioner. The Proper Officer's opinion that the reply was incomplete and unsatisfactory was deemed unsustainable as it did not reflect a proper consideration of the petitioner's submission.

The court further criticized the Proper Officer for not seeking further details if deemed necessary and failing to provide the petitioner with an opportunity to clarify or furnish additional documents. Consequently, the impugned order dated 29.12.2023 was set aside, and the Show Cause Notice was remitted for re-adjudication.

The petitioner was granted 30 days to file a further reply to the Show Cause Notice, after which 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.

The court clarified that it did not comment on the merits of the parties' contentions and reserved all rights and contentions for the parties. The petition was disposed of accordingly.

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