Chetan Garg vs. Avato Ward 105 State Goods And Service Tax And Ors & Anr.
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The petitioner, Chetan Garg, filed a writ petition challenging an order passed by the State Goods and Service Tax authorities on April 30, 2024, under Section 73 of the CGST Act, 2017. The impugned order raised a demand against the petitioner. This demand stemmed from a Show Cause Notice (SCN) alleging that the petitioner had claimed Input Tax Credit (ITC) in connection with dealings with three entities: Garg Trading, Shivakanta Sanitation Private Limited, and Raghuwar Metals Industries, who were identified as Cancelled Dealers, Return Defaulters, and Non-Tax Payers. The petitioner responded to the SCN, admitting the issue concerning Garg Trading and stating it would attend to the tax default. For the other two entities, a detailed response was submitted.
Held
The Court held that the impugned order dated April 30, 2024, passed under Section 73 of the CGST Act, 2017, was unsustainable. The Court found that the petitioner's detailed reply to the Show Cause Notice had neither been taken notice of nor examined or considered in the final order. The complete absence of any reasoning in the impugned order, despite the petitioner's submissions, led the Court to quash the order. The ratio decidendi is that statutory authorities must apply their mind to the reply submitted by the assessee in response to a show cause notice and provide reasons for their findings. The Court allowed the writ petition and quashed the impugned order, leaving it open for the respondents to pass a fresh order after considering the petitioner's reply.
Key Issues
1. Whether the impugned order dated April 30, 2024, passed under Section 73 of the CGST Act, 2017, is sustainable in law, considering the petitioner's response to the Show Cause Notice. Petitioner's Contention: The petitioner argued that the impugned order failed to consider or examine the detailed reply submitted in response to the SCN. The petitioner contended that the final order lacked any reasoning, rendering it unsustainable. The petitioner relied on the fact that their reply, forming part of the court record, was not addressed. Revenue's Contention: The judgment does not record any specific arguments made by the revenue or state authorities in defense of the impugned order. The court's observation that the reply was neither taken notice of nor examined implies a lack of proper consideration by the revenue.
Sections Cited
Section 73
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
O R D E R
The writ petition has been preferred seeking following reliefs: (i) issue a writ of certiorari or any other writ, order or direction of like nature to the Respondents, directing them to withdraw their impugned Order passed u/s 73 of the CGST Act, 2017 in Form DRC-07 on dated 30.04.2024. (ii) Pass such further and other orders, as this Hon’ble Court may deem fit and proper in the nature and circumstances of the case.”
The order dated 30 April 2024 which stands impugned herein and raises a demand against the writ petitioner under the State GST regime was preceded by a Show Cause Notice [“SCN”] which had alleged that the Input Tax Credit had been claimed in connection with Cancelled Dealers, Return Defaulters and Non-Tax Payers. The three entities which were noticed by the respondents and which the petitioner is stated to have dealings with were Garg Trading, Shivakanta Sanitation Private Limited and Raghuwar Metals Industries. 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 03/07/2025 at 07:29:25
In response to the SCN, the petitioner had taken the stand that insofar as Garg Trading is concerned, since the firm had failed to submit its GSTR-1 and GSTR-3B, the issue was not being contested and that it would attend to the tax default. Insofar as Shivkanata Sanitation Private Limited and Raghuvwar Metals Industries are concerned, the petitioner had submitted a detailed response while responding to the notice issued.
However, and as is manifest from a reading of the final order which has come to be framed, the said reply has neither been taken notice of nor have the disclosures made therein been examined or considered. In view of the aforesaid, and in light of the complete absence of any reasoning, we find ourselves unable to sustain the order impugned.
The writ petition is, accordingly, allowed. The impugned order dated 30 April 2024 is quashed. We, however, leave it open to the respondents to pass an order afresh bearing in mind the reply which has been submitted by the petitioner and which forms part of our record as Annexure P-3. YASHWANT VARMA, J
RAVINDER DUDEJA, J OCTOBER 7, 2024/kk 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 03/07/2025 at 07:29:25
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.