Order Passed by Commissioner without considering Detailed Reply in Merits: Delhi High Court quashes Tax Demand of Rs. 10.4 Crore [Read Order]

The High Court of Delhi has overturned a substantial tax demand of Rs.10.4 crore after finding fault with the Commissioner for not duly considering the petitioner’s comprehensive response.

The case, involving Bagga Link Motors Limited and the Commissioner of State Goods and Services Tax (SGST) Delhi and another, stemmed from an order dated December 30, 2023, which proposed a hefty tax demand against the petitioner.

The High Court’s decision highlights a crucial aspect of administrative adjudication under the Central Goods and Services Tax (CGST) Act, 2017.

The petitioner, represented by Mr. Ruchir Bhatia and Ms. Deeksha Gupta, challenged the order passed by the Commissioner, arguing that despite submitting a detailed reply, the Commissioner failed to adequately consider their response.

The respondent Revenue, represented by Mr. Rajeev Aggarwal argued that the petitioner’s reply was incomplete and inadequately supported by documents, failing to address the issues raised in the Show Cause Notice (SCN), warranting confirmation of the tax demand.

The single bench of Justice Sanjeev Sachdeva pointed out that the SCN issued on September 23, 2023, outlined various grounds for the proposed tax demand, including the declaration of output tax, excess claim of Input Tax Credit (ITC), scrutiny of ITC availed and other related matters. In response, the petitioner furnished a detailed reply, addressing each allegation with supporting documents.

However, the impugned order dismissed the petitioner’s reply as incomplete, unsupported by adequate documents and incapable of clarifying the issues raised.

The Court found this assessment untenable, noting that the Commissioner had not properly applied their mind to the petitioner’s submissions.

Further scrutiny revealed that the Commissioner had failed to seek additional details or documents from the petitioner, despite deeming the initial reply insufficient. This failure to provide an opportunity for clarification or supplementation was deemed unfair by the Court.

Consequently, the High Court set aside the order and remanded the matter to the Proper Officer for re-adjudication. The petitioner was granted 30 days to submit a further reply to the Show Cause Notice. The Proper Officer was directed to conduct a fresh adjudication, affording the petitioner an opportunity for a personal hearing, and to pass a new order within the statutory time frame.

The Court explicitly stated that it did not delve into the merits of the case, refraining from making any judgment on the substance of the tax dispute. Instead, it focused solely on the procedural lapses in the Commissioner’s handling of the matter.

The ruling highlighted the importance of administrative authorities diligently considering and addressing the submissions made by parties before making any conclusions.

To Read the full text of the Order CLICK HERE

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