Tax Authority Ordered to Reconsider Rs 6.27 Crore Demand with Detailed Reasoning and Fair Opportunity for Taxpayer Response

HC quashed an order under CGST Act concerning a tax demand of Rs 6.27 crore. The court found the original order cryptic and lacking proper consideration of the taxpayer's reply. HC set aside the order, directing the tax authority to re-adjudicate the show cause notice, providing the taxpayer 30 days to submit a detailed response and mandating a fresh speaking order within prescribed timelines.

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Issues involved: Impugned order u/s 73 of the Central Goods and Services Tax Act, 2017; Proper consideration of petitioner's reply; Sustainability of the impugned order; Opportunity for further clarification to petitioner; Re-adjudication of Show Cause Notice.

Impugned Order u/s 73 of the CGST Act:
The petitioner challenged the order dated 26.04.2024 which disposed of the Show Cause Notice proposing a demand of Rs 6,27,53,208.00 against the petitioner u/s 73 of the CGST Act.

Proper Consideration of Petitioner's Reply:
The petitioner had submitted a detailed reply dated 02.01.2024 to the Show Cause Notice, addressing various grounds raised by the Department. However, the impugned order did not take into consideration the reply submitted by the petitioner and was deemed as a cryptic order.

Sustainability of the Impugned Order:
The Court found that the Proper Officer did not properly consider the detailed reply with supporting documents submitted by the petitioner. The order merely stated that the reply was not properly filed/explained without justification, indicating a lack of application of mind by the Proper Officer.

Opportunity for Further Clarification to Petitioner:
The Court noted that if further details were required, the Proper Officer should have specifically sought them from the petitioner. However, no such opportunity was given to clarify the reply or provide additional documents/details.

Re-adjudication of Show Cause Notice:
Consequently, the impugned order dated 26.04.2024 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 pass a fresh speaking order within the prescribed period.

Notification No. 56 of 2023 Challenge:
The challenge to Notification No. 56 of 2023 regarding the extension of time was left open by the Court.

Disposition:
The petition was disposed of with the above terms, clarifying that the Court had not considered or commented on the merits of the contentions of either party, and all rights and contentions were reserved.

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