Non-Application of mind by Proper Officer: Delhi HC to consider Reversal of Erroneously availed ITC TRAN-I [Read Order]

The Delhi High Court directed to consider the reversal of erroneously availed input tax credit (ITC) TRAN-1 as there was no application of mind by the Proper Officer.

The Petitioner impugned the order whereby the impugned Show Cause Notice dated 27.09.2023 proposing a demand of Rs.1,84,49,974.00/- against the petitioner has been disposed of and 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 (CGST Act). The petitioner also impugned the rectification order whereby demand of Rs. 1,01,28,145.00/- has been raised against the Petitioner.

The counsel for Petitioner submitted that Petitioner had filed a detailed reply, however, the impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order.

A Division Bench of Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “The observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the reply dated 10.10.2023 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 incomplete, not duly supported by adequate documents and unable to clarify the issue which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner.”

The Court also commented that the 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.

“Further the contention of the petitioner is that ITC was erroneously taken twice in TRAN-1 and that the ITC was duly reversed in the next financial year with interest and this plea was not taken into account by the proper officer. Accordingly, the proper officer shall also examine the contention of petitioner about reversal of the erroneously availed ITC TRAN-I in accordance with law” the Court directed.

To Read the full text of the Order CLICK HERE

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