2024 (5) TMI 1379 - HC - GST

Legal Challenge Overturned: CGST Section 73 Order Invalidated Due to Procedural Fairness and Accountant's Maternity Leave

HC set aside an ex-parte demand order under Section 73 of CGST Act due to petitioner's accountant being on maternity leave. Court directed ... Order passed u/s 73 of the Central Goods and Services Tax Act, 2017 - petitioner was unaware of the proceedings and was unable to furnish a reply to the impugned Show Cause Notice, due to maternity leave - HELD THAT:- The petitioner was not aware of the proceedings due to his accountant being on maternity leave. Keeping in view the peculiar facts of the present case and since the only reason for passing the impugned order is that petitioner had not filed any reply/explanation, one opportunity needs to be granted to the petitioner to respond to the Show Cause Notice. The matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 17.04.2024 is set aside. Petition is disposed of by way of remand. Issues involved: Impugning an order under Section 73 of the Central Goods and Services Tax Act, 2017 due to a demand created against the petitioner without a reply to the Show Cause Notice.In this case, the petitioner challenged an order dated 17.04.2024 which disposed of the impugned Show Cause Notice dated 27.12.2023 proposing a demand of Rs. 7,30,212.00 against the petitioner under Section 73 of the CGST Act. The petitioner, through counsel, explained that their accountant was on maternity leave for 12 weeks, leading to unawareness of the proceedings and inability to respond to the Show Cause Notice. The Department raised grounds related to excess claim of Input Tax Credit and excess ITC availed in GSTR-3B compared to the tax on inward supplies declared by suppliers. The impugned order created a demand ex-parte as the petitioner did not reply to the Show Cause Notice, despite the explanation provided. The Court, considering the circumstances, set aside the impugned order and directed the matter to be remitted to the Proper Officer for re-adjudication, granting the petitioner an opportunity to respond to the Show Cause Notice within four weeks. The Proper Officer was instructed to re-adjudicate the matter after a personal hearing and pass a fresh 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 contentions and reserved all rights and contentions of the parties. The challenge to Notification No. 9 of 2023 regarding the initial extension of time was left open, and the petition was disposed of accordingly.