Tax Demand Quashed: Officer Fails to Follow Due Process, Must Reconsider Case with Proper Hearing and Document Evaluation

The HC set aside an order under Section 73 of CGST Act challenging a tax demand of Rs. 12,42,094. The court found the tax officer did not adequately consider the petitioner's reply, failed to provide opportunity for personal hearing, and improperly evaluated submitted documents. The case was remitted for re-adjudication with directions to give the petitioner a chance to submit further clarifications within 30 days.

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Issues Involved: Impugned order u/s 73 of Central Goods and Services Tax Act, 2017; Proper consideration of reply by Petitioner; Sufficiency of documents attached by Petitioner; Burden of proof for availing input tax credit; Opportunity for Personal Hearing; Re-adjudication of Show Cause Notice.

Impugned Order u/s 73 of CGST Act:
The Petitioner challenged the order dated 24.04.2024 passed u/s 73 of the Central Goods and Services Tax Act, 2017, which disposed of the Show Cause Notice dated 12.12.2023 proposing a demand of Rs. 12,42,094.00 against the Petitioner and created a demand including penalty. The Court set aside the impugned order and remitted the Show Cause Notice to the Proper Officer for re-adjudication.

Consideration of Petitioner's Reply:
The Petitioner had submitted a detailed reply dated 12.01.2024, but the impugned order did not take it into consideration, deeming it unsatisfactory due to lack of attached documents. The Court found that the Proper Officer did not properly consider the reply submitted by the Petitioner, as it was detailed and supported by documents.

Sufficiency of Documents Attached:
The impugned order stated that the Petitioner did not attach sufficient documents in support of the reply, leading to an ex-parte demand creation. However, the Court observed that the reply was detailed and supported by documents, indicating that the Proper Officer did not apply his mind to the Petitioner's submission.

Burden of Proof for Input Tax Credit:
The Proper Officer relied on Section 155 of the CGST Act, 2017, regarding the burden of proof for availing input tax credit. The Court noted that the burden lies on the claimant, but in this case, the Petitioner had provided supporting documents, contrary to the Officer's opinion.

Opportunity for Personal Hearing:
The Court highlighted that if further details were required, the Proper Officer should have specifically sought them from the Petitioner. However, no such opportunity was given, and the Court emphasized the importance of providing a chance to clarify and furnish additional documents.

Re-adjudication of Show Cause Notice:
The Court directed the Petitioner to file a further reply within 30 days, after which the Proper Officer must re-adjudicate the Show Cause Notice, giving an opportunity for a personal hearing and passing a fresh speaking order in accordance with the law. The Court reserved all rights and contentions of the parties and left the challenge to certain notifications open.

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