Indian Highways Management Company Limited vs. Assistant Commissioner Delhi Department Of Trade And Taxes And Anr.

Facts

The petitioner, Indian Highways Management Company Limited, filed a writ petition challenging an order dated 16.08.2024 passed by the Assistant Commissioner. This order confirmed a demand raised via a Show Cause Notice (SCN) dated 29.05.2024, pertaining to the period April-2019 to March-2020, under Section 73 of the CGST/DGST Act, 2017. The petitioner had filed a reply to the SCN on 29.06.2024. The Assistant Commissioner, in the impugned order, noted that the petitioner failed to appear for a personal hearing and found the filed reply to be "not comprehensible, conceivable, not perspicuous and is ambiguous," leading to the confirmation of the proposed demand. The petitioner contended that the reply was perfunctorily rejected without adequate reasoning.

Held

The Court held that the impugned order dated 16 August 2024 was wholly unreasoned and could not be sustained. The Court observed that the language used by the Assistant Commissioner to describe the petitioner's reply as "not comprehensible, conceivable, not perspicuous and is ambiguous" appeared to be a template and lacked specific reasoning. Consequently, the Court allowed the writ petition and quashed the impugned order. The Assistant Commissioner was directed to initiate proceedings afresh based on the existing SCN and pass a fresh, reasoned, and speaking order, taking into account the reply submitted by the petitioner. All rights and contentions of the parties on merits were kept open. The Court also reserved the petitioner's right to challenge the validity of Notification No. 49/2019-Central Tax and Notification No. 56/2023-Central Tax in appropriate proceedings.

Key Issues

1. Whether the impugned order dated 16.08.2024, passed by the Assistant Commissioner confirming the demand under Section 73 of the CGST/DGST Act, 2017, is a reasoned and speaking order, considering the reply filed by the petitioner? 2. Whether the language used by the Assistant Commissioner to describe the petitioner's reply as "not comprehensible, conceivable, not perspicuous and is ambiguous" constitutes sufficient reasoning for rejecting the reply and confirming the demand? Petitioner's arguments: The petitioner argued that the impugned order was wholly unreasoned and that the language used to describe their reply was a template, indicating a perfunctory rejection. They sought to quash the order and remit the matter for re-adjudication. Revenue's arguments: The respondent submitted that rather than retaining the matter, the ends of justice would be met by setting aside the impugned order and allowing the respondents to proceed afresh, with liberty to do so.