Tax Demand Order Quashed Due to Procedural Flaws, Authorities Directed to Reassess Case with Proper Hearing and Reasoned Decision

HC set aside a tax demand order under GST Act for Financial Year 2018-19, finding procedural irregularities in the Show Cause Notice. The court remitted the matter for re-adjudication, directing the tax authority to provide a personal hearing, properly assess the petitioner's reply, and pass a reasoned order within the prescribed period, while reserving all substantive rights of the parties.

---

---

Issues involved: Impugning an order u/s 73 of the Central Goods and Services Tax Act, 2017 regarding a demand created against the petitioner for Financial Year 2018-19 based on a Show Cause Notice dated 29.01.2024.

The petitioner challenged an order dated 30.04.2024 that disposed of a Show Cause Notice proposing a demand of Rs. 23,82,40,692.00 against the petitioner for the Financial Year 2018-19 u/s 73 of the Central Goods and Services Tax Act, 2017. The petitioner contended that the order did not consider the detailed reply submitted on 21.03.2024 and was cryptic in nature. Additionally, it was argued that the Show Cause Notice lacked proper application of mind as the Special Audit Report findings were mechanically included without proper assessment. The Department enclosed the Special Audit findings in the Show Cause Notice without providing further reasons. The petitioner submitted a detailed reply with supporting documents addressing each finding, but the impugned order deemed the reply unsatisfactory without proper consideration, leading to the conclusion that the Proper Officer did not apply his mind adequately. The Court held that the order was unsustainable as the Proper Officer failed to assess the reply on its merits and did not seek further details from the petitioner if needed. Consequently, the impugned order was set aside, and the Show Cause Notice was remitted for re-adjudication. The petitioner was granted 30 days to file a further reply, after which the Proper Officer was directed to re-adjudicate the matter, provide a personal hearing, and pass a fresh speaking order within the prescribed period. The Court clarified that it did not comment on the merits of the case, and all rights and contentions of the parties were reserved. The challenge to certain notifications regarding time extensions was left open, and the petition was disposed of accordingly.

---