2024 (8) TMI 896 - HC - GST

Tax Credit Dispute Resolved: Notices Nullified, Proper Officer Ordered to Comprehensively Review Input Tax Credit Claims

HC set aside show cause notices and orders under CGST and DGST Acts related to Input Tax Credit claims. Respondent acknowledged registration cancellation ... Vires of Section 16 (2) (c) of the CGST Act, 2017/DGST Act, 2017 - excess Input Tax Credit (ITC) demand on account of non-reconciliation of information - impugned orders are not informed by reasons as they do not deal with any of the explanation submitted by the petitioner - violation of principles of natural justice - HELD THAT:- The impugned orders are not informed by reasons as they do not deal with any of the explanation submitted by the petitioner. The impugned orders are similar to those passed on the last few days of the expiry of limitation period for making such orders. This Court has noticed in several cases that unreasoned orders are being passed in the last few days prior to the expiry of the period of limitation whereby a tabular statements as set out in the show cause notice are reproduced and the demands are confirmed, without alluding to the explanations provided by the tax payer. The respondent points out that the retrospective cancellation of the GST registration of M/s Feron Life Sciences Private Limited was restored by this Court in M/S. FERON LIFE SCIENCES PVT. LTD. VERSUS COMMISSIONER, DELHI GST AND ORS. [2024 (7) TMI 1065 - DELHI HIGH COURT]. He submits that the same would be a relevant factor in considering the demand raised from the petitioner. He concedes that the impugned orders be set aside and the matter be remanded to the Proper Officer for consideration afresh - the petitioner submits that he would be satisfied if the order to that effect is passed by this Court. The impugned orders are set aside and the matter is remanded to the Proper Officer for consideration afresh. The Proper Officer shall examine the reply furnished by the petitioner and also afford an opportunity to the petitioner for a personal hearing - Petition disposed off by way of remand. Issues:Challenging impugned show cause notices and orders under CGST Act and DGST Act.Analysis:The petitioner filed a petition challenging impugned show cause notices and orders under the CGST Act and DGST Act. The impugned orders were passed under Section 73 of the CGST Act and the DGST Act based on show cause notices issued earlier. The petitioner was accused of availing excess Input Tax Credit (ITC) due to non-reconciliation of information and alleged violation of Section 16 (2) (c) of the Acts by availing ITC from suppliers who had not paid taxes to the Government. Specifically, M/s Feron Life Sciences Private Limited was mentioned as a supplier. Additionally, the petitioner was accused of availing ITC on exempted supplies that needed to be reversed.The petitioner responded to the show cause notices with detailed explanations, but the impugned orders were passed without considering these explanations. The orders lacked reasoning and merely stated that the petitioner's reply was insufficient without addressing the content of the explanations provided. The court noted a trend of passing unreasoned orders close to the limitation period without proper consideration of taxpayer explanations.The respondent acknowledged the retrospective cancellation of M/s Feron Life Sciences Private Limited's GST registration, which had been restored by a previous court order. The respondent agreed to set aside the impugned orders and remand the matter to the Proper Officer for fresh consideration, including a personal hearing for the petitioner. The petitioner agreed to this course of action.Consequently, the court set aside the impugned orders and remanded the matter to the Proper Officer for reevaluation. The Proper Officer was directed to review the petitioner's reply and provide an opportunity for a personal hearing. The petition was disposed of accordingly, along with any pending applications.