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Decolene Fibers PVT. LTD. vs. Commissioner Dgst And Ors.

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W.P.(C)/5429/2024HC DelhiGSTCNR DLHC01020693202416 April 2024Bench: HON'BLE MR. JUSTICE SANJEEV SACHDEVA,HON'BLE MR. JUSTICE RAVINDER DUDEJA4 pages
AI SummaryRemanded

Facts

The petitioner challenged an order passed under Section 73 of the CGST Act, 2017, which raised a demand including penalty. The petitioner argued that their detailed reply to the show cause notice was not considered by the Proper Officer.

Held

The Court found that the impugned order was unsustainable as it merely stated the petitioner's reply was unsatisfactory without considering it on merits. The Court held that the Proper Officer should have applied their mind to the reply and sought further clarification if needed.

Key Issues

Whether the Proper Officer properly considered the petitioner's reply to the show cause notice before passing the impugned order. Whether the impugned order was a speaking order.

Sections Cited

Section 73, Section 75(3)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
W.P. (C) 5429/2024 Page 1 of 4 $~48 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 16.04.2024 + W.P.(C) 5429/2024 DECOLENE FIBERS PVT. LTD. ..... Petitioner versus COMMISSIONER DGST AND ORS. ..... Respondents Advocates who appeared in this case: For the Petitioner: Mr. Vineet Bhatia, Advocate For the Respondents: Mr. Rajeev Aggarwal, ASC with Ms. Shaguftha H. Badhwar, Mr. Prateek Badhwar & Ms. Samridhi Vats, Advocates CORAM:- HON’BLE MR. JUSTICE SANJEEV SACHDEVA HON'BLE MR. JUSTICE RAVINDER DUDEJA

JUDGMENT SANJEEV SACHDEVA, J. (ORAL)

1.

Petitioner impugns order dated 30.12.2023, whereby the impugned Show Cause Notice dated 24.09.2023, proposing a demand of Rs.88,34,701.00 against the Petitioner has been disposed of and a 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).

2.

Issue notice. Notice is accepted by learned counsel appearing for respondent. With the consent of the parties, petition is taken up for W.P. (C) 5429/2024 final disposal today.

3.

Learned counsel for Petitioner submits that Petitioner had filed a detailed reply dated 17.10.2023, however, the impugned order dated 30.12.2023 does not take into consideration the reply submitted by the Petitioner and is a cryptic order.

4.

Perusal of the Show Cause Notice dated 24.09.2023 shows that the Department has given separate headings i.e., excess claim Input Tax Credit [“ITC”]; scrutiny of ITC availed on reverse charge; ITC to be reversed on non-business transactions & exempt supplies; and under declaration of ineligible ITC. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving disclosures under each of the heads.

5.

Impugned order dated 30.12.2023 issued on Show Cause Notice dated 24.09.2023, after recording the narration records that the reply uploaded by the taxpayer is unsatisfactory. It 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.” The Proper Officer has opined that the reply is unsatisfactory.

6.

The observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the reply dated 17.10.2023 filed by the Petitioner is a detailed reply with supporting documents. Proper W.P. (C) 5429/2024 Officer had to at least consider the reply on merits and then form an opinion. 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.

7.

Further, if the Proper Officer was of the view that any 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.

8.

In view of the above, the impugned order dated 30.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 30.12.2023 is set aside and the matter is remitted to the Proper Officer for re-adjudication.

9.

Petitioner shall file a reply to the Show Cause Notice within a period of 30 days from today. 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.

10.

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. W.P. (C) 5429/2024 11. The challenge to Notification No. 9 of 2023 with regard to the initial extension of time is left open.

12.

Petition is disposed of in the above terms. SANJEEV SACHDEVA, J RAVINDER DUDEJA, J APRIL 16, 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.