2024 (9) TMI 1008 - HC - GST

GST Show Cause Notice Invalidated: Independent Review Ordered, Petitioner Granted Right to Submit Additional Evidence

Infiniti Retail Limited Versus Union of India & Ors.

HC ruled in favor of petitioner challenging GST show cause notice. Court directed adjudicating authority to independently examine responses to SCN without ... Violation of principles of natural justice - non-issuance of any notice regarding the discrepancies as provided in the Rule 101(4) of the Central Goods and Servies Tax Rules, 2017 - discrepancies in audit report and demands made - HELD THAT:- Prima facie, there does appear to be certain gaps in the communications. The petitioner has been throughout asserting that it had provided all the documents as sought for and on the other hand, the respondents have been issuing reminders to the petitioner to provide such documents. The petitioner also submits that the petitioner would be satisfied if the order is passed directing the adjudicating authority to consider the responses to the show cause notices uninfluenced by the observations made in the audit memo or audit report. This Court consider it apposite to direct that the adjudicating authority shall not implicitly rely on the observations made in the audit memo or audit report. The adjudicating authority shall examine the petitioner’s response/reply to the impugned SCN and independently take the decision in regard to the proposed demand - Petition disposed off. Issues:1. Impugning the Show Cause Notice under CGST Act and DGST Act.2. Allegations of discrepancies in audit report and demands made.3. Request to direct adjudicating authority to consider responses independently.Detailed Analysis:1. The petitioner filed a petition challenging the Show Cause Notice (SCN) dated 01.08.2024 issued under Section 74 of the Central Goods and Services Tax Act, 2017, and the Delhi Goods and Services Tax Act, 2017. The SCN was based on an audit conducted for the financial years 2017-18 and 2018-19. The petitioner claimed to have provided all required documents during the audit but was later asked for further documents, leading to allegations of non-compliance by the authorities.2. The petitioner contended that despite providing all documents, the Assistant Commissioner issued a reminder alleging non-compliance. Subsequently, the petitioner was asked to provide more documents for the financial years 2017-18 to 2020-21. The audit report issued by the authorities directed the petitioner to pay dues, including interest and penalty, without issuing any prior notice regarding discrepancies as required by the rules.3. The petitioner challenged the demands proposed in the impugned SCN, asserting that they were not maintainable. The petitioner requested the adjudicating authority to consider their responses to the show cause notices independently, without being influenced by the observations in the audit memo or report. The Court directed the adjudicating authority to examine the petitioner's responses to the SCN independently and make decisions regarding the proposed demands without relying on the audit observations.4. The Court emphasized that the petitioner should not be prejudiced by the audit report or memo in the adjudication of the SCN. The petitioner was granted the liberty to submit any necessary documents to contest the demands proposed in the SCN. The judgment disposed of the petition, with all rights and contentions of the parties reserved, ensuring a fair consideration of the petitioner's responses and documents in the adjudication process.