Rcube International vs. Sales Tax Officer & Anr.

Facts

The Petitioner, RCUBE INTERNATIONAL, challenged an order dated 21.03.2024, which disposed of a Show Cause Notice (SCN) dated 11.12.2023. The SCN proposed a demand of Rs 3,50,60,125.00/- against the petitioner, including penalty, under Section 73 of the Central Goods and Services Tax Act, 2017. The petitioner had filed a detailed reply to the SCN on 11.01.2024, addressing issues raised by the department concerning output tax declaration, excess ITC claims, ITC scrutiny, reversal on non-business transactions and exempt supplies, and under-declaration of ineligible ITC. The impugned order stated that the petitioner's reply was devoid of merits without justification and that the petitioner, despite opportunities, did not appear for a personal hearing.

Held

The Court held that the impugned order dated 21.03.2024 was not sustainable. The Court found that the petitioner had filed a detailed reply with supporting documents, and the Proper Officer's observation that the reply was devoid of merits without justification indicated a failure to apply his mind to the submitted reply. The Court noted that if the Proper Officer required further clarification or documents, this opportunity should have been provided to the petitioner, which the record did not reflect. Consequently, the impugned order was set aside, and the show cause notice was remitted to the Proper Officer for re-adjudication. The petitioner was granted 30 days to file a further reply, and the Proper Officer was directed 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 clarified that it had not commented on the merits of either party's contentions.

Key Issues

1. Whether the impugned order dated 21.03.2024, passed under Section 73 of the Central Goods and Services Tax Act, 2017, is sustainable in law, considering the detailed reply filed by the petitioner? Petitioner's contention: The petitioner argued that the impugned order was a cryptic order that failed to consider the detailed reply filed on 11.01.2024, which was supported by documents. The petitioner contended that the Proper Officer had not applied their mind to the reply and had merely stated it was devoid of merits without justification. The petitioner also argued that if further details were required, the Proper Officer should have sought them specifically, which was not done. Respondents' contention: The respondents, represented by the Sales Tax Officer and the GNCTD, did not explicitly record arguments in the judgment. However, the impugned order indicated that the reply was examined and found to be devoid of merits, and the taxpayer failed to appear for a personal hearing.