M/S Rajdhani Trading Co, Through Its Prop. Manoj Kumar Goel vs. Union Of INDIA & Anr.
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The petitioner, M/s Rajdhani Trading Co., through its proprietor Manoj Kumar Goel, filed a writ petition before the Delhi High Court. The petition challenged a Show Cause Notice (SCN) dated September 29, 2023, an order dated December 30, 2023, and another order dated September 6, 2024, which rejected an application for rectification. The primary challenge was to the order dated December 30, 2023, passed under Section 73 of the Central Goods and Services Tax Act, 2017. The petitioner had filed a detailed reply to the SCN. The impugned order, however, merely stated that the reply was not acceptable, incomplete, lacked adequate documents and proper justification, and therefore confirmed the demand of tax and interest.
Held
The Court held that the order dated December 30, 2023, passed under Section 73 of the CGST Act, 2017, was unsustainable due to a clear failure to assign any reasons or engage with the reply filed by the petitioner. The Court found the order to be wholly unreasoned. Consequently, the Court allowed the writ petition and quashed the impugned order dated December 30, 2023. The matter was remitted to the proper officer for re-adjudication, with the direction to consider the replies submitted by the writ petitioner. All rights and contentions of the respective parties on merits were kept open. The challenge to Notification No. 9/2023-Central Tax dated March 31, 2023, was expressly kept open to be addressed in appropriate proceedings, if warranted, as the Court disposed of the writ petition on the limited ground of the unreasoned order.
Key Issues
1. Whether the order dated December 30, 2023, passed under Section 73 of the CGST Act, 2017, is sustainable in law, given its lack of reasoning and failure to engage with the petitioner's reply? (Question of law). Petitioner's Argument: The petitioner contended that the impugned order was wholly unreasoned and failed to assign any reasons or engage with the reply filed by them, rendering it unsustainable. Revenue's Argument: The respondent (Union of India and others) did not contest the lack of reasoning. Instead, their counsel submitted that rather than the matter being retained by the Court, justice would be served by remitting the matter for fresh consideration by the proper officer. 2. Whether Notification No. 09/2023-Central Tax dated March 31, 2023, extending the limitation for concluding adjudication of SCNs under Section 73 for FY 2017-18, is ultra-vires and beyond the powers conferred by Section 168A of the CGST Act, 2017? (Question of law). Petitioner's Argument: The petitioner challenged the vires of the notification. Revenue's Argument: The judgment does not record any specific argument from the revenue on this issue.
Sections Cited
Section 73, Section 168A, Section 79
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
O R D E R %
2024 CM APPL. 67494/2024 (Ex.) Exemption is allowed, subject to all just exceptions. The application is disposed of. W.P.(C) 16070/2024 & CM APPL. 67493/2024 (Stay)
This writ petition has been preferred seeking the following reliefs: - “(A) Issue a writ, order or direction, or any other appropriate writ, quashing of quashing of Impugned SCN dated 29.09.2023, Impugned Order dated 30.12.2023 and Impugned Order dated 06.09.2024 rejecting the application for rectification of order for the F.Y 2017-18 and other consequential reliefs. 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 28/11/2024 at 12:11:31
(B) Issue a writ, order or direction declaring the Notification No. 09/2023-Central Tax dated 31.03.2023 extending the limitation for concluding the adjudication of show cause notice issued under Section 73 for F.Y 2017-18 as ultra-vires the provisions of and beyond the powers conferred under Section 168A of the CGST Act, 2017. (C) Pass any other orders or directions, as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case. (D) Craves leave of this Hon’ble Court to raise any other additional ground at the time of hearing of the present Petition”
However, before us, the challenge is laid principally to the order dated 30 December 2023 which constitutes the final decision which has been taken by the respondents in terms of Section 73 of the Central Goods and Services Tax Act, 2017 [“Act”].
We note that while responding to the original notice under Section 73 of the Act, the petitioner had filed a detailed reply, a copy of which also stands placed on our record as Annexures P-4 and P-5. 4. However, the Goods & Services Tax officer proceeded to finalize the Section 73 proceedings by merely observing as follows: -
“Whereas, a notice DRC-01 under section 73 of DGST/CGST Act, 2017 was issued to the taxpayer with details of tax demand as an attachment with the advice to pay the tax along with interest in DRC-03 within stipulated time given in the notice.
And whereas, the taxpayer through the notice DRC-01 under section 73 was also advised to file their objections/reply/supporting documents in DRC-06 within stipulated time i.e. 30 days from the date of issuance of the notice, if the taxpayer is not agreeing with the proposed demand of tax and interest in the notice DRC-01. The taxpayer filed their reply. On scrutiny of the same, it has been observed that the same is not acceptable as incomplete, not duly supported by adequate documents, without proper justification and thus unable to clarify the issue.
Since, the reply filed is not clear and satisfactory, the demand of tax and interest conveyed via DRC-01 is confirmed, with the direction to deposit the amount mentioned in DRC-07 within three months from the date of receipt of this demand notice, failing which recovery proceedings u/s 79 of CGST Act will be initiated and the actions as per law will be 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 28/11/2024 at 12:11:31
initiated without further reference.”
As is manifest from the above, there has been an apparent and clear failure to assign any reasons or engage with the reply that had been filed. Since the impugned order is wholly unreasoned, it cannot be sustained.
Faced with our aforesaid tentative conclusion, Mr. Agarwal submitted that rather than the matter being retained on the board of this Court, the ends of justice would warrant the matter being remitted for consideration of the proper officer afresh.
We, accordingly, allow the present writ petition and quash the impugned order dated 30 December 2023. The matter shall consequently be taken up by the proper officer for re-adjudication and bearing in mind the replies which were submitted by the writ petitioner. All rights and contentions of respective parties on merits are kept open.
Since we have proceeded to dispose of the writ petition on the limited ground noted above, the challenge to Notification No. 9/2023- Central Tax dated 31 March 2023 is kept open to be addressed in appropriate proceedings, if so warranted.
YASHWANT VARMA, J.
DHARMESH SHARMA, J. NOVEMBER 20, 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 28/11/2024 at 12:11:31
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.