The Delhi High Court directed the re-adjudication of the order rejecting the claim of Input Tax Credit ( ITC ) without considering the reply of the assessee. The Proper Officer is directed to intimate to the petitioner details/documents, as may be required to be furnished by the petitioner.
Petitioner, Ruchika Jain challenged the order whereby the impugned Show Cause Notice proposing a demand of Rs. 1,96,12,996.10 against the Petitioner has been disposed of and a demand including penalty has been raised against the Petitioner. The order has been passed under Section 73 of the Central Goods and Services Tax Act, 2017.
Counsel for Petitioner submitted that Petitioner was served with a Reminder Notice asking him to furnish a reply to the Show Cause Notice. He further submitted that the Petitioner filed a detailed reply dated 29.11.2023 and an additional reply dated 07.12.2023 to the Show Cause Notice. However, the impugned order does not take into consideration the replies submitted by the Petitioner and is a cryptic order.
The Show Cause Notice shows that the Department has given separate headings i.e., excess claim Input Tax Credit [“ITC”]; scrutiny of ITC availed and ITC claimed from cancelled dealers, return defaulters and tax nonpayers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving full disclosures under each of the heads.
Apart from that there is no document available in the reply to substantiate the clause of the tax charged in respect of such supply if the same has been paid to the Government in respect of the said supply. Furthermore, only based on the documents uploaded/attached by the taxpayer, compliance with 2 proviso of Section 16 of CGST Act, 2017 cannot be ascertained. Therefore, following the principle of natural justice before passing any adverse order, a further personal hearing opportunity was given to the taxpayer. Whereas, neither the taxpayer nor their representative appeared for a personal hearing despite giving sufficient opportunities, therefore, the undersigned is left with no other option but to issue DRC-07 based on the reply and documents available on the portal. And whereas, on examination of the reply/documents furnished by the taxpayer, it has been observed that since the reply is devoid of merits and without any justification or proper reconciliation, the demand raised in SCN/DRC-01 is hereby upheld along with the penalty.” The Proper Officer has opined that the reply is devoid of merits.
A division bench comprising of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja held that the order cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order is set aside and the matter is remitted to the Proper Officer for re-adjudication.
The Proper Officer is directed to intimate to the petitioner details/documents, as may be required to be furnished by the petitioner. Under the intimation being given, the petitioner shall furnish the requisite explanation and documents. Thereafter, the Proper Officer shall re-adjudicate the show cause notice after giving an opportunity for a personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75(3) of the Act.
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