Gujarat Co-Operative Milk Marketing Federation Limited vs. Sales Tax Officer Class Ii / Avato & Anr.
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The petitioner, Gujarat Co-operative Milk Marketing Federation Limited, filed a writ petition challenging an order dated 31.08.2024 passed by the adjudicating authority under Section 73 of the CGST Act/DGST Act. This order confirmed a demand of ₹1,06,52,96,461/- including interest and penalty, pursuant to a Show Cause Notice (SCN) dated 15.05.2024. The SCN alleged that the petitioner had not declared the correct tax value in its annual return (FORM GSTR-09) and had wrongfully availed input tax credit (ITC) in respect of exempted supplies. The petitioner responded to the SCN, asserting it had not claimed ITC on exempted supplies and provided a reconciliation statement. The impugned order, however, disregarded the petitioner's response, stating it lacked supporting documents and clarity, and was not satisfactory or comprehensible. The court noted this was a common occurrence where demands were confirmed on the last date of limitation for the financial year 2019-20.
Held
The Court held that the adjudicating authority had failed to properly consider the petitioner's detailed response to the Show Cause Notice. The impugned order's reasoning, stating the reply was "lack of supporting document and clarity" and "not satisfactory," was found to be a perfunctory rejection without engaging with the substance of the petitioner's submissions. This failure to provide a reasoned consideration of the petitioner's defense violated principles of natural justice. The Court noted that remanding the matter to the adjudicating authority for a fresh decision, as suggested by the respondents, would effectively grant the authority additional time beyond the statutory limitation period for adjudication, thereby frustrating legislative intent. In similar past cases, the respondents had agreed to dispose of remanded matters within six months. Therefore, the Court set aside the impugned order and remanded the matter to the adjudicating authority for a fresh adjudication within six months from the date of the order, after affording the petitioner an opportunity to be heard. The Court clarified that if adjudication was not completed within this period, the proceedings would lapse. No specific issue was left undecided.
Key Issues
1. Whether the adjudicating authority properly considered the petitioner's response to the Show Cause Notice before passing the impugned order, as required by principles of natural justice and Section 73 of the CGST Act/DGST Act? 2. Whether the impugned order, which confirmed a substantial demand without adequately addressing the petitioner's detailed response and reconciliation, is sustainable? The petitioner argued that its detailed response, spanning fifteen pages and including a reconciliation statement, was disregarded by the adjudicating authority. It contended that the authority's finding that the reply was "lack of supporting document and clarity" and "not satisfactory" was a mere ipse dixit, failing to engage with the merits of the petitioner's submissions, thereby violating principles of natural justice. The petitioner relied on its own submissions and the fact that the response was comprehensive. The respondents, through their counsel, conceded that the impugned order might be set aside and the matter remanded to the adjudicating authority for a fresh decision. They did not present any arguments against the petitioner's contentions regarding the inadequacy of the impugned order.
Sections Cited
Section 73
AI-generated summary — verify with the full judgment below
W.P.(C) 13103/2024 $~87 * IN THE HIGH COURT OF DELHI AT NEW DELHI %
Date of Decision: 19.09.2024
+ W.P.(C) 13103/2024 CM APPL. 54766/2024 GUJARAT CO-OPERATIVE MILK MARKETING FEDERATION LIMITED .....Petitioner Through: Mr. V.P. Gupta, Mr. Anuj Bansal and Mr. Anunav Kumar, Advs. versus
SALES TAX OFFICER CLASS II / AVATO & ANR......Respondents Through: Mr. Rajeev Aggarwal, ASC alongwith Mr. Shubham Goel, Advocate.
CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE Mr. JUSTICE SACHIN DATTA
VIBHU BAKHRU, J.(Oral)
Issue notice.
The learned counsel appearing for the respondents accepts notice.
The petitioner has filed the present petition impugning an order dated 31.08.2024 (hereafter the impugned order) passed by the adjudicating authority under Section 73 of the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act)/ Delhi Goods and Services Tax Act, 2017 (hereafter the DGST Act) confirming a demand of ₹1,06,52,96,461/- including interest and penalty. The impugned order is passed pursuant to a Show Cause Notice dated 15.05.2024 (hereafter the SCN) raising the said demand.
It is alleged in the SCN that the petitioner had not declared the W.P.(C) 13103/2024 correct tax value in filing its annual return under the FORM GSTR-09. A substantial part of the demand proposedis founded on the allegation that the petitioner had wrongfully availed the input tax credit (hereafter ITC) in respect of the exempted supplies.
The petitioner responded to the SCN by a letter dated 15.06.2024. The petitioner asserted that it had not claimed any ITC in respect of the exempted supplies. In addition, the petitioner also furnished a reconciliation statement. It is material to note that the petitioner’s response to the SCN spans fifteen pages. It is apparent from a plain reading of the impugned order that the response submitted by the petitioner to the SCN has been disregarded. The impugned order rejects the response furnished by the petitioner to various grounds in the following words:- “And whereas, the submissions of the taxpayer and explanation of the AR during personal hearing has been considered and after examination of the updated reply, it is found that the reply is lack of supporting document and clarity and thus found not satisfactory. In view of the above, and after having gone through the final reply filed on the GST portal by the taxpayer in respect of each point, it is observed that the reply filed by the taxpayer is still not comprehensible, conceivable and perspicuous and therefore, the proposed demand mentioned in the Show Cause Notice i.e. conveyed through notice DRC-01 is confirmed.”
This is yet another case where the adjudicating authority has simply confirmed the demand on the last date before expiry of the period of limitation for passing an order under Section 73 of the CGST Act in respect of the financial year 2019-20. 7. Mr. Aggarwal, learned counsel appearing for the W.P.(C) 13103/2024 respondentssubmits that the impugned order may be set aside and the matter be remanded to the adjudicating authority for deciding it afresh.
It is relevant to note that remanding a matter to the concerned authority has the effect of providing further time of two years for the adjudicating authority to adjudicate the SCN. In the aforesaid manner the authority haseffectively frustrated the legislative provisions stipulating the period of limitation for adjudicating the assessments.
In similar matters [W.P.(C) 10591/2024 being Khemka Aviation Private Limited v. Sales Tax Officer Class II/AVATO Ward 1 & Ors. and connected matters], the respondents had made a statement that if the matter is remanded to the concerned adjudicating authority, the same would be disposed of within a period of six months from date.
In the given circumstances, we set aside the impugned order and remand the matter to the adjudicating authority to consider it afresh. We further direct that the adjudicating authority shall complete the adjudication within a period of six months from date after affording the petitioner an opportunity to be heard.
It is clarified that if the adjudication is not completed within the aforesaid period, the proceedings shall lapse.
The present petition is disposed of in the aforesaid terms.
All pending applications are also disposed of.
VIBHU BAKHRU, J
SACHIN DATTA, J SEPTEMBER 19, 2024 at
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.