Proper Officer should consider Reply on Merits to form Opinion: Delhi HC quashes Demand of 7 Crores [Read Order]

The Delhi High Court quashed demand of 7 crores and held that the Proper Officer should consider reply on merits to form opinion.

The Petitioner impugned the order, whereby the impugned Show Cause Notice, proposing a demand of Rs. 7,86,84,337.00 against the Petitioner has been disposed of and a 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.

The counsel for Petitioner submitted that Petitioner had filed a detailed reply dated 07.11.2023, however, the impugned order does not take into consideration the reply submitted by the Petitioner and is a cryptic order.

The impugned order, however, after recording the narration records that the reply uploaded by the taxpayer is not found to be satisfactory. It states that “And whereas, in response to the DRC-01. the Taxpayer submitted his reply in DRC-06 and the reply of the registered person, as well as data available on GST Portal has been checked/examined and the reply/submission of the Taxpayer is not found to be satisfactory. **** Now, since No further additional reply/explanation has been received from the taxpayer despite sufficient and repeated opportunities, which indicate that the taxpayer has nothing to say in the matter. In view of aforesaid circumstances, the undersigned is left with no other option to create demand ex-pane, in accordance with the provisions of CGST/ DGST Act & Rules, 2017.”

A Division Bench of Justices Sanjeev Sachdeva and Ravinder Dudeja observed that “The observation in the impugned order dated 28.12.2023 is not sustainable for the reasons that the reply dated 07.11.2023 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 not found to be satisfactory, which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner.”

“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 Court held.

To Read the full text of the Order CLICK HERE

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