Canara Bank vs. Assistant Commissioner, Dgst

Facts

The Petitioner, Canara Bank, challenged an order dated 26.12.2023, which disposed of a Show Cause Notice dated 25.09.2023 and raised a demand of Rs.20,07,15,517.00 against the Petitioner, including penalty. The order was passed under Section 73 of the Central Goods and Services Tax Act, 2017. The Petitioner argued that its detailed reply dated 19.10.2023 was not considered by the adjudicating authority, rendering the impugned order cryptic. The Show Cause Notice had raised issues concerning excess claim of Input Tax Credit (ITC), declaration of ineligible ITC, reversal of ITC on non-business transactions and exempt supplies, and ITC claimed from cancelled dealers, return defaulters, and tax non-payers. The Petitioner had provided a comprehensive reply addressing each of these points.

Held

The Court held that the impugned order dated 26.12.2023 was not sustainable. The Court found that the Petitioner had filed a detailed reply to the Show Cause Notice, and the Proper Officer was obligated to consider this reply on its merits. The observation in the impugned order that the reply was incomplete, not duly supported by adequate documents, unclear, and unsatisfactory, without a proper application of mind to the contents of the reply, was deemed unsustainable. The Court also noted that if the Proper Officer required further details, these should have been specifically sought from the Petitioner, and the record did not indicate that such an opportunity was provided. Consequently, the Court set aside the impugned order and remitted the matter to the Proper Officer for re-adjudication. The Proper Officer was directed to intimate the Petitioner about any required details or documents, after which the Petitioner would furnish them. The Proper Officer would then re-adjudicate 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 clarified that it had not commented on the merits of either party's contentions and reserved all rights and contentions. The challenge to Notification No. 9 of 2023 regarding the initial extension of time was left open.

Key Issues

1. Whether the impugned order dated 26.12.2023, passed under Section 73 of the CGST Act, 2017, is sustainable in law, considering the Petitioner's contention that its detailed reply dated 19.10.2023 was not adequately considered by the Proper Officer? Petitioner's Arguments: The Petitioner contended that the impugned order was cryptic and failed to consider the detailed reply submitted by it. The Petitioner argued that the Proper Officer did not apply his mind to the reply and merely stated it was incomplete, not duly supported by adequate documents, unclear, and unsatisfactory, without specifying the deficiencies or seeking further clarification. The Petitioner asserted that if further details were required, the Proper Officer should have specifically requested them, which was not done. Respondent's Arguments: The judgment records no specific arguments made by the Respondent (Assistant Commissioner, DGST).