M/S Shree Padma Industries vs. Union Of INDIA & Ors.
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The Petitioner, M/s Shree Padma Industries, challenged an order dated 12.12.2023, which disposed of a Show Cause Notice (SCN) dated 29.09.2023 and raised a demand of Rs. 9,04,200.00, including penalty, under Section 73 of the Central Goods and Services Tax Act, 2017. The Petitioner contended that the SCN mentioned an Annexure-B containing calculations for excess Input Tax Credit (ITC) under Section 16(2)(c) of the Act, and they requested a copy of this annexure and portal activation to file a reply. The Respondent, Union of India & Ors., initially stated there was no Annexure-B, claiming the relevant tabular data was part of the SCN itself. The impugned order was passed ex-parte due to the Petitioner's alleged failure to file a reply or appear for a personal hearing, despite multiple opportunities.
Held
The Court held that the Petitioner was not adequately provided with the necessary information to file a reply to the Show Cause Notice. The discrepancy regarding the existence and provision of Annexure-B, which the Petitioner claimed was essential for their reply concerning excess ITC under Section 16(2)(c) of the CGST Act, was a critical factor. The Court noted that the Respondent's assertion that no Annexure-B existed was only made during the court proceedings, not when the Petitioner had sought clarification from the Proper Officer. Given this ambiguity and the Petitioner's claim of not receiving the required details, the Court found it appropriate to grant one opportunity to the Petitioner to respond to the SCN. Consequently, the impugned order dated 12.12.2023 was set aside, and the SCN was remitted to the Proper Officer for re-adjudication. The Petitioner was directed to file a further reply within two weeks, after which the Proper Officer was to re-adjudicate after providing a personal hearing and passing a fresh speaking order within the period prescribed under Section 75(3) of the Act. The Court explicitly stated that it had not commented on the merits of the parties' contentions, and the challenge to Notification No. 9 of 2023 regarding the initial extension of time was left open.
Key Issues
1. Whether the Petitioner was adequately provided with the necessary information to file a reply to the Show Cause Notice, specifically concerning the alleged Annexure-B and the calculations of excess ITC under Section 16(2)(c) of the CGST Act, 2017? Petitioner's Arguments: The Petitioner argued that the SCN explicitly referred to an Annexure-B containing crucial working for excess ITC and that their request for this annexure was not met. They further contended that the Respondent's assertion that no Annexure-B existed was only made during the court proceedings, not when the Petitioner sought clarification. Revenue's Arguments: The Respondent, under instructions, submitted that there was no separate Annexure-B, and the required tabular data was incorporated within the SCN itself. They also stated that the Petitioner failed to file a reply or appear for personal hearings despite multiple opportunities, including a reminder, leading to an ex-parte decision.
Sections Cited
Section 73, Section 16(2)(c), 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 12.12.2023 whereby the impugned Show Cause Notice dated 29.09.2023 proposing a demand of Rs. 9,04,200.00/- against the petitioner had been disposed of and demand including penalty has been raised 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) 6274/2024 2. Learned counsel for Petitioner submits that the Show Cause Notice dated 29.09.2023, issued in Form GSTR-01, stated that the working of Excess ITC under section 16(2)(c) of the Act was appended to the Notice as Annexure-B. Petitioner appeared before Respondent No. 3 and requested it to provide the tabular chart annexed as Annexure-B and further to activate the GST portal to enable the Petitioner to file the reply to show cause notice.
Learned counsel for the Respondent, under instructions, submits that there is no Annexure-B to the Show Cause Notice as mentioned in the attachment to the Show Cause Notice. He submits that Annexure-B is in tabular form, which is extracted in the said document itself and as such, there is no separate Annexure-B.
Perusal of the Show Cause Notice dated 29.09.2023 shows that the Department has given reasons under separate headings i.e., excess claim of ITC and scrutiny of ITC availed.
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 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 accorded to the taxpayer by issuing “REMINDER” through the GST portal. ****** Now, since no reply / explanation has been received from the taxpayer despite sufficient and WP (C) 6274/2024 repeated opportunities, which indicates that the taxpayer has nothing to submit in the matter. In view of aforesaid circumstances, the undersigned is left with no other option but to decide the matter ex-parte, in accordance with the provisions of CGST / DGST Act & Rules, 2017, 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.
It may be noticed that the Show Cause Notice specifically states that there is an Annexure – B to the show cause notice and Petitioner claims to have requested the Proper Officer for a copy of Annexure – B to enable it to file a reply. Neither copy of Annexure B was supplied nor was petitioner informed that there is no annexure-B. It is only for the first time in these proceedings that the Respondents state that there is no Annexure-B and the table contained in the Show Cause Notice contains all the details.
The only reason for passing the impugned order is that petitioner had not filed any reply to the Show Cause Notice. In view of the stand of the Respondents that there is no Annexure-B, we are of the view that one opportunity needs to be granted to the Petitioner to respond to the Show Cause Notice.
Accordingly, the impugned order dated 12.12.2023 is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication.
Petitioner shall file a further reply to the Show Cause Notice within two weeks from today. Thereafter, the Proper Officer shall re-adjudicate the WP (C) 6274/2024 Show Cause Notice after giving an opportunity of personal hearing to the Petitioner 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.
The challenge to Notification No. 9 of 2023 with regard to the initial extension of time is left open.
Petition is disposed of in the above terms. SANJEEV SACHDEVA, J RAVINDER DUDEJA, J MAY 17, 2024 RM
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.