Tax Order Struck Down: Unreasoned Assessment Invalidated, Petitioner Granted Opportunity to Present Full Defense Under Proper Procedural Scrutiny

HC found merit in petitioner's challenge against tax order. The court set aside the unreasoned order demanding Rs. 2.74 crore, noting lack of proper reasoning and personal hearing. Matter was remanded for fresh consideration, with parties retaining their original rights and contentions. The decision allows petitioner to raise further defenses in subsequent proceedings.

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Issues:
Impugning order dated 26.12.2023 and Notification No. 9/2023-Central Tax dated 31.03.2023, Barred by limitation, Excess Input Tax Credit availed, Lack of personal hearing, Unreasoned impugned order.

Analysis:
The petitioner challenged an order dated 26.12.2023 and Notification No. 9/2023-Central Tax dated 31.03.2023, extending the time limit for passing orders under the Central Goods and Services Act, 2017. The petitioner contended that the Show Cause Notice dated 23.09.2023 and a reminder notice dated 08.12.2023 were time-barred. The petitioner, a sole proprietor, traded in goods like "Iron" and "Pulses" during the tax period from July 2017 to March 2018. The petitioner filed returns and reconciliation statements but was issued a Show Cause Notice alleging excess Input Tax Credit availed. The petitioner responded, stating some goods were tax-free. However, a reminder notice lacking a date for a personal hearing was issued. Subsequently, an order was passed on 26.12.2023 demanding Rs. 2,73,78,128.40, without providing reasons for rejecting the petitioner's response or conducting a proper personal hearing.

The High Court found merit in the petitioner's argument that the impugned order was unreasoned and set it aside. The court noted that the order lacked reasons for rejecting the response and incorrectly assumed a personal hearing was conducted. As a result, the court did not delve into the limitation issue raised by the petitioner. The matter was remanded for fresh consideration by the respondent. The court clarified that parties retained their rights and contentions, allowing the petitioner to raise defenses as advised. Additionally, the order did not prevent the petitioner from challenging the impugned notification at a later stage. All pending applications were disposed of accordingly.

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