Non-Application of Mind by Proper Officer: Delhi HC quashes GST demand of Rs 1 crore [Read Order]

The Delhi High Court quashed GST demand of Rupees one crore as there was non-application of mind by the Proper Officer.

The Petitioner impugned the order dated 28.12.2023, whereby the impugned Show Cause Notice dated 24.09.2023, proposing a demand of Rs. 1,38,12,142.00 against the Petitioner has been disposed of and a demand including penalty has been raised against the Petitioner.

The counsel for Petitioner submitted that Petitioner had filed a detailed reply dated 24.10.2023, however, the impugned order dated 28.12.2023 does not take into consideration the reply submitted by the Petitioner and is a cryptic order. A Perusal of the Show Cause Notice dated 24.09.2023 shows that the Department has given separate headings i.e., excess claim of Input Tax Credit [“ITC”] 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 disclosures under each of the heads.

A Division Bench of Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is not supported with complete relevant documents, 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 or documents 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, impugned order dated 28.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, impugned order dated 28.12.2023 is set aside and the matter is remitted to the Proper Officer for re-adjudication” the Tribunal noted.

To Read the full text of the Order CLICK HERE

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