The Delhi High Court directed re-adjudication of the show cause notice ( SCN ) in the absence of application of mind by the Proper Officer.
The petitioner impugned the order whereby the impugned Show Cause Notice dated 24.09.2023, proposing a demand of Rs.8,79,33,598.00/- against the Petitioner has been disposed of and a demand including penalty has been created against the Petitioner. The order has been passed under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act).
The counsel for the petitioner submitted that the petitioner had filed a detailed reply and uploaded it online. However, the impugned order does not fully take into consideration the reply submitted by the Petitioner and has passed a cryptic order.
A Division Bench of Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “Perusal of the Show Cause Notice shows that the Department has raised grounds under separate headings i.e., under declaration of output tax; the tax on outward supplies under declared on reconciliation of data in GSTR-09; excess claim Input Tax Credit [“ITC”]; scrutiny of ITC availed; ITC to be reversed on non-business transaction and exempt supplies; under declaration of ineligible ITC and ITC claimed from cancelled dealers, return defaulters and tax non-payers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving detailed disclosures under each of the heads with supporting documents.”
“The observation in the impugned order does not take into consideration all the points raised in the reply by the petitioner. Proper Officer had to at least examine the complete reply along with documents submitted by the petitioner and then form an opinion. He merely held that the reply filed by the petitioner is partially found non satisfactory which ex-facie shows that Proper Officer has not applied his mind to the complete reply submitted by the petitioner” the Court noted while setting aside the show cause notice.
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