Two GST Adjudication Orders Issued, Both Bereft of Facts on Excess ITC Allegations: Calcutta HC Directs Provision of Particulars [Read Order]

The Calcutta High Court recently set aside two adjudication orders passed under Section 73 of the CGST/WBGST Act, 2017, alleging excess availment of Input Tax Credit (ITC), after noting that both orders were bereft of the facts and grounds on which the demands were raised.

Writ petitioner Pharma Trading Corporation was first issued a show cause notice dated February 21, 2023 which, according to the Court, merely contained a chart indicating the alleged tax liability without setting out requisite particulars. The petitioner had replied to the show cause notice on March 09, 2023

The petitioner was later issued two adjudication orders dated May 29, 2023 and June 05, 2023 which held the petitioner liable to pay tax for the period July 2017 to March 2018 on the ground of excess ITC availment.

On June 09, 2023, another order was uploaded on the portal whereby the proper officer intimated that the petitioner’s reply was satisfactory and no further action was required to be taken in the matter.

However, the Revenue later debited ₹2,51,858 from the petitioner’s electronic credit ledger on the basis of the adjudication order dated June 05, 2023.

Counsel for the petitioner reiterated that the show cause notice and consequent orders violated Sections 75(4) and 75(6) of the Act and were passed without affording the petitioner an effective opportunity of hearing.

Counsel for the State submitted that the authorities may be permitted to withdraw the actions and the matter be remitted for fresh consideration, in light of the serial erroneous uploading of orders.

Justice Om Narayan Rai observed that the initial show cause notice was clearly bereft of particulars and that the adjudication orders were unreasoned and breached of statutory provisions and principles of natural justice.

The Court also noted that the second repetition of the same adjudication order on June 05, 2023 was clearly without authority as the proper officer becomes functus officio after passing the first adjudication order dated May 29, 2023.

Accordingly, the Calcutta High Court set aside the orders dated May 29, 2023, June 05, 2023 and June 09, 2023, while directing the authorities to furnish all relevant particulars in support of the show cause notice, and the petitioner be entitled to file reply to the same.

The High Court also ordered the reversal of the amount debited from the petitioner’s electronic ledger within two weeks.

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