The Delhi High Court set aside the order demanding sales tax passed without providing adequate opportunity for a hearing. It was noted that the petitioner was not provided with an adequate opportunity to defend the show cause notice by hearing.
The petitioner, Gac Shipping India Private Ltd challenged the order whereby the show cause notice proposing a demand against the petitioner has been confirmed, raising a demand of Rs. 29,44,686/- against the petitioner. The order has been passed under Section 73 of the Central Goods and Services Tax Act, 2017.
Senior Counsel for the petitioner submitted that no intimation of the hearing was given to the petitioner and the order is very cryptic and does not give any reasons and merely states that “the reply submitted by the taxpayer was not found to be satisfactory and that the taxpayer has not been able to submit substantial proof in support of his reply”.
A perusal of the show cause notice showed that 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 cancelled dealers, return defaulters and tax non-payers. To the said show cause notice, a detailed reply dated 18.10.2023 along with Form GST DRC-06 dated 19.10.2023 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 unsatisfactory and the taxpayer has not been able to submit substantial proof in support of his reply. The Proper Officer has opined that the reply is unsatisfactory and the taxpayer failed to appear for a personal hearing despite being given repeated opportunities.
In case the Proper Officer was of the view that the reply was 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 noted that the hearing was fixed on 07.11.2023, before the reply furnished by the petitioner. Further, the petitioner was not provided with an adequate opportunity to defend the show cause notice by hearing.
The division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja order cannot be sustained and the matter is liable to be remitted to the Proper Officer for readjudication. The court set aside the impugned order and show cause notice, Further, remanded the matter 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 within one week from today. On such intimation being given, the petitioner shall furnish the requisite explanation and documents within one week thereof.
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