Alka Enterprises Through Proprietor Ashok Kumar vs. Union Of INDIA & Ors.
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The petitioner, Alka Enterprises, is challenging an order dated 08.12.2023, which disposed of a Show Cause Notice (SCN) dated 26.09.2023 and imposed a demand of Rs 12,03,064.80/- including penalty. The order was passed under Section 73 of the Central Goods and Services Tax Act, 2017. The petitioner's GST registration had been cancelled effective 18.06.2021 due to illness and old age. The petitioner claims they did not receive the SCN as all communications were through the GST portal and they were unaware of the proceedings, thus unable to file a reply. The SCN raised grounds concerning excess claim of Input Tax Credit (ITC) due to non-reconciliation, and ITC claimed from cancelled dealers, return defaulters, and tax non-payers. The impugned order noted that the taxpayer neither filed a reply nor appeared for a personal hearing, and despite a 'REMINDER' issued through the GST portal, no response was received, leading to an ex-parte demand.
Held
The Court held that since the impugned order was passed ex-parte solely on the ground that the petitioner had not filed a reply/explanation, it was necessary to grant one opportunity to the petitioner to respond to the Show Cause Notice. The Court reasoned that the petitioner's claim of not being aware of the proceedings due to their GST registration being cancelled and communications being on the portal warranted a re-adjudication. Accordingly, the impugned order dated 08.12.2023 was set aside. The Court directed the petitioner to file a reply to the Show Cause Notice within 30 days. Subsequently, the Proper Officer is to re-adjudicate the SCN after providing an opportunity for a personal hearing and passing a fresh speaking order within the period prescribed under Section 75(3) of the Act. The Court explicitly clarified that it had neither considered nor commented upon the merits of the contentions of either party, reserving all rights and contentions.
Key Issues
1. Whether the impugned order dated 08.12.2023, passed under Section 73 of the CGST Act, 2017, is liable to be set aside on the ground that the petitioner was not aware of the proceedings and did not receive the Show Cause Notice? Petitioner's Contention: The petitioner argued that they did not receive the Show Cause Notice as all communications were directed to the GST portal, and their registration was cancelled prior to the issuance of the notice. Consequently, they were unaware of the pendency of proceedings and could not file a reply. They sought an opportunity to file a reply to the SCN. Respondents' Contention: The respondents, through the impugned order, noted that the taxpayer neither filed a reply/explanation within the stipulated period nor appeared for a personal hearing. A 'REMINDER' was also issued through the GST portal, but no response was received, indicating the taxpayer had nothing to say. The demand was therefore created ex-parte in accordance with the provisions of the CGST/DGST Act & rules.
Sections Cited
Section 73, Section 75(4), Section 75(3)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT SANJEEV SACHDEVA, J. (ORAL)
Petitioner impugns order dated 08.12.2023 whereby the impugned Show Cause Notice dated 26.09.2023 proposing a demand of Rs 12,03,064.80/- against the petitioner has been disposed of and a demand including penalty has been created against the petitioner. The order has been passed under Section 73 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the Act). WP (C) 6816/2024 2. Issue notice. Notice is accepted by learned counsel appearing for respondent. With the consent of the parties, petition is taken up for final disposal today.
As per the petitioner, he applied for cancellation of GST registration due to his illness and old age. The GST registration of the petitioner was cancelled with effect from 18.06.2021. 4. Learned counsel for Petitioner submits that neither did he receive the Show Cause Notice, as all the communications were through the GST portal, nor was he aware of the pendency of the proceedings. As such, he could not file any reply to the said Show Cause Notice. He further prays for an opportunity to be granted to the petitioner to file a reply to the Show Cause Notice.
Perusal of the Show Cause Notice dated 26.09.2023 shows that the Department has raised grounds under separate headings i.e., excess claim of Input Tax Credit [“ITC”]; the excess input tax credit (ITC) claimed on account of non-reconciliation of information and ITC claimed from cancelled dealers, return defaulters & tax non payers.
The impugned order, however, after recording the narration records that demand as ex-parte is created. It states that “And whereas, it is noticed that the Taxpayer neither filed reply/explanation within stipulated period nor appeared for Personal Hearing before WP (C) 6816/2024 Proper Officer on the given date and time, Further, another opportunity to submit reply and for the sake of natural justice opportunity for Personal Hearing, as per provision of Section 75(4) DGST Act, was also provided to the taxpayer by issuing "REMINDER" through the GST portal.**** Now, since no reply/ explanation bas been received from the taxpayer despite sufficient and repeated opportunities, which indicate that the taxpayer has nothing to say in the matter. In view of aforesaid circumstances, the undersigned is left with no other option to create demand ex-parte, in accordance with the provisions of CGST/DGST act & rules Therefore the drc-07 has been issued along with applicable interest as per discrepancies already conveyed through SCN/DRC-01.” The Proper Officer has opined that despite providing another opportunity, neither an online reply has been filed nor has the petitioner appeared in person or through an authorized representative.
As per the petitioner, he was not aware of the proceedings as the GST registration stood cancelled w.e.f. 18.06.2021 and all communication for the said proceedings were uploaded on the GST portal.
In view of the above, since the only reason for passing the impugned order is that the petitioner had not filed any reply/explanation, one opportunity needs to be granted to the petitioner to respond to the Show Cause Notice. The matter is liable WP (C) 6816/2024 to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 08.12.2023 is set aside.
Petitioner may file a reply to the Show Cause Notice within 30 days from today. Thereafter, the Proper Officer shall re-adjudicate the Show Cause Notice after giving an opportunity of personal hearing and shall pass a fresh speaking order in accordance with law within the period prescribed under Section 75 (3) of the Act.
It is clarified that this Court has neither considered nor commented upon the merits of the contentions of either party. All rights and contentions of parties are reserved.
Petition is disposed of in the above terms. SANJEEV SACHDEVA, J RAVINDER DUDEJA, J MAY 27, 2024/vp
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.