M/S Kamal Bearing PVT LTD vs. Union Of INDIA & Anr.
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The petitioner, M/s Kamal Bearing Pvt Ltd, filed a writ petition challenging a final order dated 30 August 2024, passed under Section 73 of the Central Goods and Services Tax Act, 2017. The proceedings were initiated by a Show Cause Notice (SCN) dated 28 May 2024. The petitioner submitted a detailed response to the SCN on 13 July 2024. However, the final order simply stated, "Not Agreed with Tax Payer" in relation to each point raised in the SCN. The petitioner contended that this reasoning was wholly unreasoned and therefore unsustainable in law. The respondents, Union of India and another, did not dispute the lack of reasoning in the order.
Held
The Court allowed the writ petition and quashed the final order dated 30 August 2024. The Court found the order to be "wholly unreasoned" and therefore "unsustainable in law," as it merely stated "Not Agreed with Tax Payer" without addressing the petitioner's detailed reply to the Show Cause Notice. The reasoning was that a speaking order, which addresses the contentions raised by the taxpayer, is a fundamental requirement of law. The Court accepted the submission of the contesting respondent that the matter should be remanded for a fresh decision. The respondents were granted liberty to pass a fresh and reasoned speaking order, taking into account the reply submitted by the petitioner to the original SCN. The challenge to Notification No. 56/2023- Central Tax dated 28 December 2023 was expressly kept open for future proceedings.
Key Issues
1. Whether the final order dated 30 August 2024, passed under Section 73 of the CGST Act, 2017, is legally sustainable given its lack of reasoning. The petitioner argued that the final order was "wholly unreasoned" and therefore "unsustainable in law" because the authority merely stated "Not Agreed with Tax Payer" without addressing the petitioner's detailed response to the Show Cause Notice. The respondents, through their counsel, did not contest this assertion. Instead, they submitted that the ends of justice would be met by allowing the respondents an opportunity to dispose of the SCN proceedings afresh, rather than having the matter decided by the Court.
Sections Cited
Section 73
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
O R D E R %
2024
CM APPL. 70060/2024 (Ex.) Allowed, subject to all just exceptions. The application is disposed of. W.P.(C) 16575/2024 & CM APPL. 70059/2024 (Interim Relief)
The writ petitioner impugns the final order dated 30 August 2024 passed in purported exercise of powers conferred by Section 73 of the Central Goods and Services Tax Act, 2017 [“CGST”].
The proceedings had commenced pursuant to a Show Cause Notice [“SCN”] dated 28 May 2024. The petitioner had furnished a detailed response on 13 July 2024 and which forms part of our digital record as Annexure P/4. However, and while passing the final order, all that the competent authority of the respondents has chosen to This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 10/12/2024 at 11:03:49
observe is “Not Agreed with Tax Payer”. It is this reasoning which is replicated in relation to each of the heads in respect of which the SCN had come to be issued. Since the order is wholly unreasoned, it is clearly rendered unsustainable in law.
Faced with our aforesaid tentative conclusion, Mr. Ojha, learned counsel appearing for the contesting respondent, submitted that rather than the matter being retained on our board, the ends of justice would merit the respondents being accorded an opportunity to dispose of the SCN proceedings afresh.
We accordingly allow the instant writ petition and quash the final order dated 30 August 2024. We leave it open to the respondents to pass a fresh and reasoned speaking order bearing in mind the reply which was submitted by the petitioner to the original SCN.
The challenge to Notification No. 56/2023- Central Tax dated 28 December 2023 is kept open, to be addressed in appropriate proceedings, if need so arises.
YASHWANT VARMA, J.
DHARMESH SHARMA, J. DECEMBER 2, 2024 sp
This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 10/12/2024 at 11:03:49
Reproduced from the public record of the Delhi High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.