2024 (5) TMI 1306 - HC - GST

Improper Adjudication Leads to Order Reversal, Petitioner Granted 30 Days to File Detailed Reply and Seek Personal Hearing

Samsung India Electronics Private Limited Versus Union Of India & Ors.

HC found the impugned order dated 27.04.2024 unsustainable due to improper adjudication by the Proper Officer. The order was set aside and remitted for ... Availment of excess Input Tax Credit - comparison of GSTR-2A with GSTR-3B filed by the Petitioner - HELD THAT:- The taxpayer has not rendered his cooperation in this regard. Further, during the course of physical hearing the company has mentioned that the ITC data of the firm is now reflected in 2A after the completion of the special audit. The same has been checked through online portal of GSTIN and found that there is still mismatch in the CGST & SGST for the year 2018-19. And whereas, the undersigned with the consider opinion that the observations/facts derived during the course of audit must be confirmed. And whereas, further as per Section 73 (7) Notice of tax and interest is to be given while Section 73 (9) prescribes for imposition of penalty equivalent to 10% of tax or Rs. 10000/- whichever is higher in case reply is not found to be satisfactory. Accordingly, a demand is being created towards Tax /Interest amount already confirmed through SCN/ DRC-01 (Copy attached) in accordance with the provisions of CGST / DGST Act & Rules, 2017.” The observation in the impugned order dated 27.04.2024 is not sustainable for the reasons that the reply 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 not substantial to counter the observation of the auditor which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner. The impugned order dated 27.04.2024 cannot be sustained and is accordingly set aside - petition disposed off. Issues involved: Impugning order and Show Cause Notice, validity of audit process, alleged excess Input Tax Credit claim, Proper Officer's adjudication process.Impugning Order and Show Cause Notice: The petitioner challenged an order dated 27.04.2024, disposing of a Show Cause Notice dated 30.01.2024. The petitioner contended that the audit process was conducted improperly and the documents were unsigned by the Proper Officer, making them invalid. The petitioner also argued that the comparison of GSTR-2A with GSTR-3B showed no excess Input Tax Credit claim, but rather a lesser claim than available.Proper Officer's Adjudication: The Proper Officer did not consider the documents furnished by the petitioner and concluded that the reply was not substantial to counter the auditor's observations. The Proper Officer failed to apply his mind to the detailed reply submitted by the petitioner, indicating a lack of proper consideration. Additionally, the petitioner was not given an opportunity to clarify or provide further details, rendering the adjudication process flawed.Judgment: The High Court found the impugned order dated 27.04.2024 unsustainable as the Proper Officer did not adequately consider the petitioner's detailed reply. The order was set aside, and the Show Cause Notice was remitted to the Proper Officer for re-adjudication. The petitioner was granted 30 days to file a further reply, and the Proper Officer was directed to re-adjudicate the matter, providing a personal hearing and issuing 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 all rights and contentions were reserved. The challenge to Notification No. 9 of 2023 regarding the initial time extension was left open, and the petition was disposed of accordingly.