GST Department Order Under Section 73 Invalidated, Case Remitted for Fresh Hearing with Detailed Consideration of Evidence

HC found the GST department's order under Section 73 unsustainable. The order dismissing petitioner's reply was cryptic and did not adequately consider submitted documents. The court set aside the impugned order, remitted the show cause notice for re-adjudication, and directed the Proper Officer to conduct a fresh hearing within prescribed timelines, granting petitioner 30 days to file a detailed response.

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Issues:
Impugned order under Section 73 of the Central Goods and Services Tax Act, 2017; Vagueness of summary notice; Consideration of petitioner's reply in the impugned order; Sustainability of the impugned order; Error in audit observation reference in the impugned order.

Analysis:
The petitioner challenged an order dated 30.04.2024 that disposed of a Show Cause Notice proposing a demand of Rs. 10,04,94,110.00 against the petitioner under Section 73 of the Central Goods and Services Tax Act, 2017. The petitioner contended that the summary notice issued was vague and based on the risk of excess Input Tax Credit (ITC) availed due to a mismatch in GSTR-3B/9 and GSTR-2A. The petitioner had filed detailed replies on 18.04.2024 and 24.04.2024, but the impugned order did not consider these responses adequately, leading to a cryptic decision (paragraphs 1-5).

The Show Cause Notice was based on an audit observation indicating a mismatch in ITC availed by the petitioner. The petitioner provided a detailed reply to this observation, but the impugned order dismissed the response as unsatisfactory, alleging that relevant documents were not furnished. The court found this reasoning unsustainable as the petitioner had submitted detailed replies with supporting documents, indicating a lack of proper consideration by the Proper Officer (paragraphs 6-8).

Moreover, the petitioner argued that the reference to an audit observation in the impugned order was erroneous since no audit was conducted on the petitioner as per Section 65 of the Act. The court agreed that the audit reference appeared to be cryptic and possibly related to an audit of the GST Department itself, further undermining the validity of the impugned order (paragraph 9).

Consequently, the court set aside the impugned order and remitted the Show Cause Notice to the Proper Officer for re-adjudication. The petitioner was granted 30 days to file a further reply, and the Proper Officer was directed to conduct a fresh adjudication with a personal hearing and issue a speaking order within the prescribed period under the Act. The court clarified that it did not comment on the merits of the parties' contentions, reserving all rights and contentions for future proceedings (paragraphs 10-13).

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