M/S Biba Fashion LTD vs. Govt Of Nct Of Delhi And Ors & Ors.
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The Petitioner, M/s BIBA Fashion Ltd., challenged an order dated 26.12.2023, which disposed of a Show Cause Notice (SCN) dated 24.09.2023 and raised a demand of Rs. 56,32,814.00 against it, including penalty. The SCN, issued under Section 73 of the Central Goods and Services Tax Act, 2017, detailed various grounds for demand, including issues related to output tax declaration, ITC reconciliation, excess ITC claims, ITC under ISD, reversal of ITC on non-business/exempt supplies, ineligible ITC, and ITC from cancelled dealers. The Petitioner filed a detailed reply on 18.12.2023. However, the impugned order merely stated that the Petitioner's reply was incomplete, not supported by adequate documents, unclear, and unsatisfactory, without addressing the merits of the reply.
Held
The Court held that the impugned order dated 26.12.2023 was not sustainable. The reasoning was 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 order's assertion that the reply was "incomplete, not duly supported by adequate documents, unclear and unsatisfactory" without a proper application of mind to the Petitioner's submissions indicated a failure to adjudicate the matter properly. The Court also noted that if the Proper Officer required further details, they should have been specifically requested from the Petitioner, and no such opportunity was recorded. Consequently, the Court set aside the impugned order and remitted the matter back to the Proper Officer for re-adjudication. The Petitioner was directed to file a fresh reply within 30 days, after which the Proper Officer would re-adjudicate the SCN, provide a personal hearing, and pass a fresh speaking order within the period prescribed under Section 75(3) of the Act. The Court explicitly stated that it had not commented on the merits of either party's contentions.
Key Issues
1. Whether the impugned order dated 26.12.2023, passed under Section 73 of the Central Goods and Services Tax Act, 2017, is sustainable in law, considering it allegedly failed to consider the Petitioner's detailed reply dated 18.12.2023? Petitioner's Contentions: The Petitioner argued that the impugned order was cryptic and did not take into consideration the detailed reply submitted by them. They contended that the Proper Officer failed to apply their mind to the reply and that if further details were required, they should have been specifically sought, with an opportunity provided for clarification or submission of further documents. Revenue's Contentions: The judgment records no specific arguments made by the Revenue or respondents.
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 26.12.2023, whereby the impugned Show Cause Notice dated 24.09.2023, proposing a demand of Rs.56,32,814.00 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).
Issue notice. Notice is accepted by learned counsel appearing for respondent. W.P. (C) 5200/2024 3. With the consent of the parties, petition is taken up for final disposal today.
Learned counsel for Petitioner submits that Petitioner had filed a detailed reply dated 18.12.2023, however, the impugned order dated 26.12.2023 does not take into consideration the reply submitted by the Petitioner and is a cryptic order.
Perusal of the Show Cause Notice dated 24.09.2023 shows that the Department has given separate headings i.e., under declaration of output tax; reconciliation of GSTR-01 with GSRT-09; excess claim Input Tax Credit [“ITC”]; Scrutiny of ITC availed under I ; ITC to be reversed on non-business transactions & exempt supplies; under declaration of ineligible ITC; and ITC claimed from cancelled dealers, return defaulters & tax non payers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving disclosures under each of the heads.
The impugned order, however, after recording the narration records that the reply uploaded by the taxpayer is incomplete, not duly supported by adequate documents, unclear and unsatisfactory. It states that “On the basis of reply uploaded by the taxpayer, it has been observed that the same is incomplete, not duly supported by adequate documents and unable to clarify the issue. As such, taxpayer is not entitled to get benefit on the basis of its plain reply which is not supported with proper calculations/reconciliation and relevant W.P. (C) 5200/2024 documents. Since, the reply filed is not clear and satisfactory” The Proper Officer has opined that the reply is incomplete, not duly supported by adequate documents, not clear and unsatisfactory.
The observation in the impugned order dated 26.12.2023 is not sustainable for the reasons that the reply dated 18.12.2023 filed by the Petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion. He merely held that the reply is incomplete, not duly supported by adequate documents, not clear and 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 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.
In view of the above, the impugned order dated 26.12.2023 cannot be sustained, and the matter is liable to be remitted to the Proper Officer for re-adjudication. Accordingly, the impugned order dated 26.12.2023 is set aside and the matter is remitted to the Proper Officer for re-adjudication.
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 W.P. (C) 5200/2024 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 APRIL 09, 2024/vp
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.