Realsteel Tyre Company (INDIA) vs. The Principal Commissioner Of GST
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The petitioner, Realsteel Tyre Company (India), challenged an order dated December 29, 2023, passed by the Principal Commissioner of GST. This order disposed of a show cause notice dated December 1, 2023, and raised a demand of Rs. 36,60,531.00, including penalty, against the petitioner. The petitioner argued that the impugned order was cryptic and failed to consider their detailed reply filed on December 9, 2023. The show cause notice had raised issues concerning the declaration of output tax and tax on outward supplies, based on a reconciliation of data in GSTR-09. The petitioner had provided disclosures under each heading in their reply.
Held
The Court held that the impugned order dated December 29, 2023, was not sustainable. The reasoning was that the petitioner had filed a detailed reply, and the Proper Officer was obligated to consider this reply on its merits before forming an opinion that it was unsatisfactory. The order's statement that the reply was unsatisfactory, without any detailed consideration, ex-facie indicated a lack of application of mind by the Proper Officer. Furthermore, if the Proper Officer required further details or clarification, they should have specifically sought them from the petitioner, and the record did not show any such opportunity being 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 to the petitioner any details or documents required, after which the petitioner would furnish them. The Proper Officer would then re-adjudicate the show cause notice after providing an opportunity of 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 considered or commented upon the merits of the contentions of either party, reserving 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 December 29, 2023, passed under Section 73 of the Central Goods and Services Tax Act, 2017, is sustainable when it merely states that the petitioner's reply to the show cause notice was unsatisfactory without considering its merits? Petitioner's Contention: The petitioner contended that their reply to the show cause notice was detailed and provided full disclosures. They argued that the impugned order failed to consider this reply on merits and was therefore unsustainable. They further argued that if the Proper Officer found the reply unsatisfactory, they should have sought specific clarifications or further details, which was not done. Respondent's Contention: The respondent, represented by the Principal Commissioner of GST, argued that the reply submitted by the taxpayer was not satisfactory. The judgment notes that the Proper Officer opined the reply was unsatisfactory and that no further additional reply or explanation was received despite opportunities, leading to an ex-parte demand.
Sections Cited
Section 73, 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 29.12.2023, whereby the impugned Show Cause Notice dated 01.12.2023, proposing a demand against the petitioner has been disposed of and a demand of Rs. 36,60,531.00 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).
Learned counsel for Petitioner submits that a detailed reply dated 09.12.2023 was filed to the Show Cause Notice, however, the impugned order dated 29.12.2023 does not take into consideration the reply submitted by the petitioner and is a cryptic order.
Perusal of the Show Cause Notice shows that the Department has given separate headings, inter alia, under declaration of output tax, tax on outward supplies under declared on reconciliation of data in GSTR-09. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving full disclosures under each of the heads.
The impugned order, however, after recording the narration, records that the reply uploaded by the tax payer is not satisfactory. It merely states that “And whereas, in response to the DRC-01, the Taxpayer submitted his reply in DRC-06 and the reply of the registered person as well as data available on GST Portal has been checked/examined and the reply/submission of the Taxpayer is not found to be satisfactory. ******* Now, since No further additional reply/explanation has 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” The Proper Officer has opined that the reply is unsatisfactory.
The observation in the impugned order dated 29.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion whether the reply was unsatisfactory. He merely held that the reply is unsatisfactory which ex-facie shows that Proper Officer has not applied his mind to the reply submitted by the petitioner.
Further, if the Proper Officer was of the view that the reply is unsatisfactory and further details were required, the same could have been specifically sought from the petitioner. However, the record does not reflect that any such opportunity was given to the petitioner to clarify its reply or furnish further documents/details.
In view of the above, the order cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 29.12.2023 is set aside. The matter is remitted to the Proper Officer for re-adjudication.
As noticed hereinabove, the impugned order records that petitioner’s reply is not satisfactory. Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner. Pursuant to the intimation being given, petitioner shall furnish the requisite explanation and documents. 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.
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 MARCH 13, 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.