Retrovis Fashion PVT. LTD. vs. Sales Tax Officer Class Ii / Avato
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The petitioner, Retrovis Fashion Pvt. Ltd., challenged a Show Cause Notice (SCN) dated 28.02.2022 and an order dated 29.03.2022, both passed under Section 74 of the Delhi Goods and Services Tax Act, 2017 (DGST Act), for the financial year 2020-21. The impugned order confirmed a demand of ₹98,34,425/-. The petitioner's GST registration was cancelled on 13.01.2020. Subsequently, the Director who knew the GST portal passwords passed away on 16.11.2020, leaving the petitioner without access to the portal. The petitioner claims it did not receive the SCN and, having ceased business operations, had no output liability. The impugned order was passed without affording the petitioner a hearing.
Held
The Court allowed the petition and set aside the impugned order passed under Section 74 of the DGST Act. The Court reasoned that the petitioner's claims regarding non-receipt of the SCN and lack of access to the GST portal due to the death of its Director were significant. The respondent also conceded to the setting aside of the order and remand. Therefore, the Court found it appropriate to provide the petitioner with an opportunity to respond to the SCN. The petitioner was directed to file a reply to the impugned SCN within two weeks. The adjudicating authority was then directed to consider the reply and pass a fresh order after affording the petitioner an opportunity to be heard. The issue of the petitioner's output liability was not decided on merits but was to be considered in the fresh adjudication.
Key Issues
1. Whether the impugned order passed under Section 74 of the DGST Act is liable to be set aside on the grounds that the petitioner did not receive the Show Cause Notice and was not afforded an opportunity of hearing, due to lack of access to the GST portal following the death of its Director who held the passwords. The petitioner argued that it could not access its GST portal due to the death of its Director who possessed the necessary passwords. Consequently, it claims it did not receive the Show Cause Notice and was denied an opportunity of hearing before the impugned order was passed. The petitioner also contended that it had ceased business operations, negating any output liability. The respondent, represented by the Sales Tax Officer Class II/AVATO, stated that it had no objection to the impugned order being set aside and the matter being remanded for fresh consideration.
Sections Cited
Section 74
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Cause title — parties, addresses and appearances
O R D E R % 13.08.2024
The petitioner has filed the present petition, inter alia, impugning the Show Cause Notice dated 28.02.2022 (hereafter the impugned SCN) and the order dated 29.03.2022 (hereafter the impugned order), passed under Section 74 of the Delhi Goods and Services Tax Act, 2017 (hereafter the DGST Act) in respect of the financial year 2020-21. 2. In terms of the impugned order, a demand of ₹98,34,425/- has been confirmed. The petitioner states that his GST registration was cancelled on 13.01.2020. Further, the Director of the petitioner company, who was aware of the passwords of the GST portal (Sh. Vikas Gupta), expired shortly thereafter on 16.11.2020. 3. In the given circumstances, the petitioner claims that he did not have access to its GST portal.
The respondent issued the impugned SCN under Section 74 of the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 02/09/2024 at 12:26:31
DGST Act, proposing a demand of ₹98,34,425/- including interest and penalty for the financial year 2020-21. 5. The petitioner claims that he did not receive the impugned SCN. Further, it had stopped its business and therefore, had no occasion to examine the GST portal which, in any case, it could not do for want of the password. In these circumstances, the impugned order was passed without hearing the petitioner or affording him any further opportunity of hearing.
The learned counsel for the petitioner further submits that the petitioner company has effectively closed its business and has not carried out any business for the last four years. Thus, there was no question of any output liability.
The learned counsel appearing for the respondent submits that he has no objection if the impugned order is set aside and the matter is remanded to the adjudicating authority for consideration afresh.
In view of the above, we allow the present petition and, the impugned order passed under Section 74 of the DGST Act is set aside.
The petitioner may file a reply to the impugned SCN within a period of two weeks from date.
The adjudicating authority shall consider the same and pass an appropriate order after affording the petitioner an opportunity to be heard.
The petition is disposed of in the aforesaid terms. VIBHU BAKHRU, J SACHIN DATTA, J AUGUST 13, 2024/cl This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 02/09/2024 at 12:26:31
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.