Mohinder Kumar vs. Pr. Commissioner Of Delhi Goods And Services Tax & Ors.

Facts

A batch of writ petitions were filed before the Delhi High Court challenging unreasoned orders passed under Section 73 of the Central Goods & Services Tax Act, 2017 / Delhi Goods & Services Tax Act, 2017. The petitioners contended that these orders were passed without considering their responses to the Show Cause Notices (SCNs) and were issued in the final days before the expiry of the limitation period for the financial years 2017-18 and 2018-19. The revenue, through counsel, acknowledged that a large number of such orders were passed by some officers in the last few days of the extended limitation period, with one officer passing 526 orders in the last three days. The impugned orders often merely reproduced the demand in the SCN and rejected the taxpayer's response as unsatisfactory.

Held

The Court set aside the impugned orders and remanded the matters for fresh adjudication by the adjudicating authority. The Court accepted the revenue's submission that the remanded matters should be disposed of within six months by passing reasoned and speaking orders. Furthermore, after remand, the SCNs will be reviewed, and if no infractions are found, they shall be dropped, with a communication sent to the concerned dealer/assessee. The Court directed that no adverse order shall be passed against any petitioner without affording them a reasonable opportunity to be heard, and all their rights and contentions are reserved. The Court found merit in the petitioners' contention that granting further time to adjudicate would frustrate the object of stipulated periods for completion of adjudication.

Key Issues

1. Whether the unreasoned orders passed under Section 73 of the CGST Act/DGST Act, which failed to consider the petitioners' responses to the Show Cause Notices and were issued near the expiry of the limitation period, are liable to be set aside as non est? Petitioners' arguments: The petitioners argued that such orders are void ab initio and should be construed as no order in the eyes of law, as their primary objective appears to be circumventing the limitation period. They also contended that many SCNs were AI-generated and not properly vetted, leading to unnecessary notices, even in cases where tax liability was already discharged. Revenue's arguments: The revenue, through counsel, submitted that the matters may be remanded back to the adjudicating authority for fresh adjudication within a specified period. They also agreed to a review of the SCNs after remand, with a commitment to drop notices where no infractions are found.