GST order passed without providing Opportunity to reply to SCN alleging illegal ITC Claim: Delhi HC sets aside Order against Federal Bank [Read Order]

The Delhi High Court set aside the order and Show Cause Notice ( SCN ) against Federal Bank Ltd alleging an illegal Input Tax Credit ( ITC ) Claim. The Goods and Service Tax ( GST ) order was passed without providing adequate opportunity to reply to SCN.

order dated 27.12.2023, whereby the show cause notice dated 23.09.2023, proposing a demand against the petitioner has been confirmed. The order has been passed under Section 73 of the Central Goods and Services Tax Act, 2017.

Senior Counsel for the petitioner submitted that notice was issued on 24.12.2023 at 20:39, fixing a date of hearing on 26.12.2023 at 11:30 AM in Delhi. He submitted that 25.12.2023 was a holiday on account of Christmas and as such, time was too short for the petitioner to take instructions from its head office and appear for hearing. 

The impugned order dated 27.12.2023 was passed in a very cryptic manner without giving any reason and it merely states that “reply is not clear and satisfactory”.

It was viewed that in the SCN, the Department has given specific details of alleged under declaration of output tax, excess claim Input Tax Credit [“ITC”], under declaration of ineligible ITC and ITC claim from canceled dealers, return defaulters and tax non-payers. To the said show cause notice, a detailed reply was furnished by the petitioner giving full disclosures under each of the heads.

The impugned order, however, after recording the narration, records that the reply uploaded by the taxpayer is incomplete, not duly supported by adequate documents unable to clarify the issues and the Proper Officer has opined that reply is not clear and unsatisfactory.

The Court viewed that “In case the Proper Officer was of the view that reply is incomplete and further details were required, the same could have been 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. “

The Court was of the view that adequate opportunity had not been granted to the petitioner to defend the show cause notice by way of a hearing. While allowing the petition the division bench comprising justice Sanjeev Sachdeva and Justice Ravinder Dudeja remitted the matter to the Proper Officer for readjudication. The impugned order and show cause notice was  set aside.

To Read the full text of the Order CLICK HERE

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