2024 (12) TMI 437 - HC - GST

Officer's Section 74 order quashed for ignoring petitioner's reply to Section 73 notice on same issues

The HC set aside an order issued under Section 74 of CGST/SGST Acts due to procedural irregularity. The petitioner received notices under both Section 73 ... Challenge to Ext.P6 order issued under the provisions of Section 74 of the Central Goods and Services Tax/State Goods and Services Tax Acts - HELD THAT:- Technically the learned Senior Government Pleader may be right in contending that since the petitioner did not submit any reply to the notice issued under Section 74 of the CGST/SGST Acts, the officer proceeded to complete the proceedings on the basis that the petitioner had not submitted any reply. However, in the peculiar facts and circumstances of this case, it must be noticed that the show cause notice under Section 73 of the CGST/SGST Acts was issued on 22-12-2023, to which the petitioner had filed a reply on 17-01-2024. In the meanwhile, on 08-01-2024, a fresh notice had been issued invoking the provisions of Section 74 of the CGST/SGST Acts. Since the notice was issued by the same officer and on the same issue and since the petitioner had submitted a reply on 17-01-2024, which was after the date on which the show cause notice under Section 74 of the CGST/SGST Acts was issued, the officer could not have proceeded on the basis that no reply had been submitted by the petitioner to the show cause notice issued under Section 74 of the CGST/SGST Acts. Ext.P6 order set aside on the short ground that it proceeds on the basis that the petitioner had not submitted any reply to the show cause notice issued under Section 74 of the CGST/SGST Acts - petition disposed off. Issues:Challenge to Ext.P6 order issued under Section 74 of the CGST/SGST Acts.Analysis:The petitioner, a registered person under the CGST/SGST Acts, received a notice in Form GST ASMT-10 for transactions in 2018-2019. Despite a reminder and personal hearing, the petitioner replied on 15-09-2023. Subsequently, a show cause notice under Section 73 of the CGST/SGST Acts was issued on 22-12-2023, to which the petitioner responded on 17-01-2024. The officer then issued a notice under Section 74 of the CGST/SGST Acts on 08-01-2024. The petitioner did not reply to this notice, leading to the issuance of the Ext.P6 order. The petitioner contended that as the issues in both notices were the same and a reply was submitted for the Section 73 notice, the officer erred in concluding the Section 74 proceedings without considering the earlier reply. The Senior Government Pleader argued that fresh Section 74 proceedings were warranted due to suppression, and since no reply was filed for the Section 74 notice, the officer's actions were justified.The court acknowledged that technically, the officer was correct in finalizing the proceedings under Section 74 based on the lack of a reply. However, considering the timeline and circumstances, where the petitioner responded to the Section 73 notice after the Section 74 notice was issued by the same officer, the court found fault with the officer's decision. Noting that the Section 74 notice came shortly after the Section 73 notice and the petitioner had submitted a reply post the Section 74 notice issuance, the court held that the officer should not have proceeded as if no reply was submitted. Consequently, the court set aside the Ext.P6 order and directed the proceedings under Section 74 to be restored to the officer for fresh orders. The petitioner was granted an opportunity to file a detailed reply and participate in the proceedings, with a scheduled appearance date. The court clarified that its decision did not reflect any opinion on the case's merits.In conclusion, the writ petition challenging the Ext.P6 order issued under Section 74 of the CGST/SGST Acts was disposed of. The court's decision focused on the procedural irregularity regarding the petitioner's reply submission and the officer's handling of the Section 74 proceedings, emphasizing the need for proper consideration of replies and opportunities for participation in such cases.