The Delhi High Court quashed a demand of 12 lakhs made by the Department on the ground of excess claim of input tax credit ( ITC ) on account of non-reconciliation of information declared in GSTR-3B.
The Petitioner impugned the order whereby the impugned Show Cause Notice, proposing a demand of Rs 12,42,094.00/- 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 Petitioner submitted that Petitioner had filed a detailed reply dated 12.01.2024, however, the impugned order dated 24.04.2024 does not take into consideration the reply submitted by the Petitioner and is a cryptic order.
On perusal of the Show Cause Notice it can be seen that the Department has raised grounds under separate headings i.e., net tax under declared due to non-reconciliation of turnovers in other returns and E-way bill information; reconciliation of GSTR-01 with GSTR 3-B; excess claim of Input Tax Credit [“ITC”]; the excess input tax credit (ITC) claimed on account of non-reconciliation of information declared in GSTR-3B and Excess ITC availed in GSTR-3B compared to the tax on inward supplies declared by suppliers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving response under each of the heads with supporting documents.
A Two-Member Bench comprising Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “The observation in the impugned order dated 24.04.2024 is not sustainable for the reasons that the reply dated 12.01.2024 filed by the Petitioner is a detailed reply with supporting documents. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not satisfactory and taxpayer has not attached sufficient documents in support of his reply which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner.”
“Further, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. In view of the above, the impugned order dated 24.04.2024 cannot be sustained and is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication” the Court noted.
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