Non-Application of Mind by Proper Officer to Reply submitted: Delhi HC quashes Order passed u/s 73 of CGST Act [Read Order]

The Delhi High Court quashed an order passed under Section 73 of the Central Goods and Service Tax Act, 2017 ( CGST Act ) as there was non-application of mind by the Proper Officer to reply submitted.

The Petitioner impugned the order, whereby the impugned Show Cause Notice, proposing a demand against the petitioner has been disposed of and a demand of Rs.8,22,82,330.00 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.

The counsel for Petitioner submitted that a detailed reply was filed to the Show Cause Notice, however, the impugned order does not take into consideration the reply submitted by the petitioner and is a cryptic order.

Perusal of the Show Cause Notice shows that the Department has given separate headings under declaration of output tax, excess claim Input Tax Credit [“ITC”], under declaration of ineligible ITC and ITC claim 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.

A Division Bench of Justices Ravinder Dudeja and Sanjeev Sachdeva observed that “The observation in the impugned order is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion whether the reply was devoid of merits. He merely held that the reply is devoid of merits which exfacie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner.”

“In view of the above, the order cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 24.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication. As noticed hereinabove, the impugned order records that petitioner has not furnished the requisite details. Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner” the Court noted.

To Read the full text of the Order CLICK HERE

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