2024 (12) TMI 1283 - HC - GST

Assistant Commissioner's Section 73 CGST order quashed for lacking proper reasoning and violating natural justice principles

Delhi HC quashed an order passed under Section 73 of the CGST Act, 2017 by the Assistant Commissioner. The court found the order lacked proper reasoning ... Unreasoned order - Template orders and non-application of mind - Quashing of order for lack of reasons - Obligation to consider reply and afford adequate opportunity of hearing - Reconsideration in accordance with lawUnreasoned order - Template orders and non-application of mind - Quashing of order for lack of reasons - Validity of the final order dated 16 August 2024 passed under Section 73 of the Central Goods and Services Tax Act, 2017 - HELD THAT: - The Court found that the Assistant Commissioner adopted a recurring template in the final order, rejecting the petitioner's reply as 'not comprehensible, conceivable, not perspicuous and is ambiguous' without any independent reasoning or application of mind. Such formulaic language, repeatedly used by the officer in earlier matters and brought to the officer's notice, rendered the impugned order wholly unreasoned. The absence of considered findings addressing the substance of the reply or explaining why the reply was inadequate amounted to a failure to discharge the obligation to decide on the merits and denied the petitioner proper adjudication of the SCN for the period April-2019 to March-2020. [Paras 3, 4, 6]Impugned order dated 16 August 2024 quashed and set aside for being unreasoned and reflecting non-application of mind.Obligation to consider reply and afford adequate opportunity of hearing - Reconsideration in accordance with law - Whether respondents may proceed afresh after quashing and the manner in which further proceedings should be conducted - HELD THAT: - The Court left open the respondents' power to proceed afresh in relation to the original SCN, but directed that any further action must be taken in accordance with law and with regard to the reply already filed by the petitioner. The Court also required that a copy of this order be placed before the Principal Commissioner for review of adjudicatory practice where template orders are being employed. The determination emphasises that further adjudication must involve application of mind, address the substance of the petitioner's submissions and accord adequate opportunity of hearing rather than rely on formulaic conclusions. [Paras 5, 6]Respondents permitted to proceed further on the SCN but only in accordance with law and bearing in mind the petitioner's reply; review by Principal Commissioner requested.Final Conclusion: Writ petition allowed; impugned order of 16 August 2024 quashed for being unreasoned. Respondents may proceed further on the earlier show cause notice for April-2019 to March-2020 in accordance with law and after giving due regard to the reply filed by the petitioner; rights and contentions on merits kept open. Issues:Challenging final order under Section 73 of Central Goods and Services Tax Act, 2017 for lack of reasoning and non-application of mind by the Assistant Commissioner.Analysis:The judgment concerns a writ petition challenging a final order passed by the Assistant Commissioner under Section 73 of the Central Goods and Services Tax Act, 2017. The petitioner had responded to a Show Cause Notice (SCN) before the final order was issued. The order stated that the taxpayer failed to attend the personal hearing despite multiple opportunities and that the reply filed was deemed incomprehensible and ambiguous. The court observed that the Assistant Commissioner had used a standard template in the order, lacking individualized reasoning, indicating a lack of application of mind. This issue of using a template order language was previously highlighted in a separate case, where the officer failed to make any corrections despite prior caution from the court.The court found the impugned order to be unreasoned and directed the respondents' counsel to present the judgment to the Principal Commissioner for a review of the adjudication process concerning such cases. Consequently, the court allowed the writ petition, setting aside the order dated 16 August 2024. The respondents were given the liberty to proceed as per the earlier SCN issued, taking into account the petitioner's submitted reply. Importantly, the judgment clarified that all rights and contentions of the parties on merits are preserved for future consideration, leaving the matter open for further legal proceedings.