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IN THE HIGH COURT OF DELHI AT NEW DELHI
Sanjeev Sachdeva, Ravinder Dudeja, JJ.
Aarem Trad Ex Private Limited - Appellant
Versus
Sales Tax Officer & Anr. - Respondents
W.P.(C) 2767 of 2024 & CM APPL. 11319 of 2024
Decided On : 23-02-2024
Central Good and Service Tax Act 2017 - Demand created against petitioner due to error in claiming GST credit - Impugned order set aside for lack of reasoning and failure to consider petitioner's reply - Matter remitted for re-adjudication with opportunity for additional reply
Fact of the Case:
Petitioner challenges order concluding proceedings under Section 73 of the Central Good and Service Tax Act 2017 and creating a demand against the petitioner due to error in claiming Integrated GST credit instead of CGST and SGST credit.
Finding of the Court:
The court found that the impugned order lacked reasoning and failed to consider the detailed reply submitted by the petitioner, setting it aside and remitting the matter for re-adjudication with an opportunity for the petitioner to file an additional reply.
Issues: Error in claiming GST credit, lack of reasoning in impugned order, failure to consider petitioner's reply
Ratio Decidendi: The court emphasized the requirement for the proper officer to consider the petitioner's reply on merits and provide reasoning for the decision, highlighting the need for a comprehensive assessment before creating a demand.
Final Decision: The petition was allowed, and the impugned order was set aside, remitting the matter for re-adjudication with an opportunity for the petitioner to file an additional reply.
JUDGMENT
Sanjeev Sachdeva, J. (Oral)
1. Petitioner impugns order dated 22.12.2023 whereby the proceedings under Section 73 of the Central Good and Service Tax Act 2017 have been concluded and a demand has been created against the petitioner.
2. Learned counsel for petitioner submitted that the petitioner had, on account of an error, claimed Integrated GST credit instead of CGST and SGST credit which was a mere bona fide clerical error.
3. He submitted that the amount is still lying to the credit of the petitioner and that the petitioner had duly informed the authorities of the same in response to the Show Cause Notice.
4. He further submitted that the impugned order does not record any finding on the said reply or even advert to the reply filed by the petitioner. It merely states that the reply was not found comprehensive.
5. It is noticed that the order dated 22.12.2023 records that "Since, no payment has been made within 30 days of the issue of the notice by you; therefore, on the basis of documents available with the department and information furnished by you, if any, demand is created for the reasons and other details attached in annexure".
6. Further, the observation in the impugned order dated 22.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply.
7. The proper officer had to at least consider the reply on merits and then form an opinion whether the explanation was sufficient or not. He merely held that " since no payments has been made within 30 days of the issue of notice by you and no proper reply/explanation has been received" which ex-facie shows that proper officer has not even looked at the reply submitted by the petitioner.
8. Accordingly the Impugned order being bereft of any reasoning is not sustainable and is set aside.
9. The matter is accordingly remitted to the proper officer to re- adjudicating the Show Cause Notice after giving an opportunity of personal hearing to the petitioner.
10. At request of learned senior counsel for the petitioner, we permit the petitioner to file additional reply to the Show Cause Notice within a period of one week from today.
11. The challenge to the subject notifications raised by the petitioner is left open.
12. The petition is allowed in the above terms.
Proper Officer must consider the reply on merits and provide opportunity for clarification or further documents/details before creating demand ex-parte.
Proper adjudication process and consideration of petitioner's reply before passing an order.
An unsigned notice or order cannot be considered valid, and the purpose of a Show Cause Notice is to enable the noticee to respond to the specific allegations.
Granting an opportunity for response and personal hearing before adjudication based on the peculiar facts and circumstances of the case.
The judgment establishes the requirement of affording a minimum period of 30 days for responding to show cause notices under Section 73 of the CGST Act and emphasizes the need for show cause notices ....
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