Safe Fly Aviation Services Private Limited vs. Union Of INDIA And Ors

Facts

The Petitioner, Safe Fly Aviation Services Private Limited, challenged an order dated 30.12.2023, which disposed of a Show Cause Notice dated 23.09.2023 and raised a demand of Rs.2,92,00,768.00, including penalty, against the Petitioner. The order was passed under Section 73 of the Central Goods and Services Tax Act, 2017. The Petitioner contended that its detailed reply dated 20.10.2023 to the Show Cause Notice was not considered by the adjudicating authority, rendering the impugned order cryptic and unsustainable. The Show Cause Notice had raised issues concerning output tax, excess claim of Input Tax Credit (ITC), reversal of ITC on non-business transactions and exempt supplies, ineligible ITC, and ITC claimed from cancelled dealers, return defaulters, and tax non-payers.

Held

The Court held that the impugned order dated 30.12.2023 was not sustainable. The Court found that the Proper Officer had merely opined that the Petitioner's reply was "not satisfactory" without applying their mind to the merits of the detailed reply submitted. This ex-facie indicated a lack of application of mind. The Court further noted that if the Proper Officer required further details or clarification, they should have specifically sought them from the Petitioner, an opportunity that was not 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 required details or documents, after which the Petitioner would furnish the explanation and documents. The Proper Officer is to re-adjudicate the show cause notice after providing an opportunity of personal hearing and pass 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 the contentions of either party and reserved 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 30.12.2023, passed under Section 73 of the CGST Act, 2017, is sustainable in law, considering the Petitioner's contention that its detailed reply dated 20.10.2023 was not adequately considered. Petitioner's Arguments: The Petitioner argued that the impugned order was cryptic and did not take into consideration the detailed reply submitted by the Petitioner. The Petitioner asserted that the Proper Officer merely stated the reply was "not satisfactory" without applying their mind to the merits of the reply. Furthermore, the Petitioner contended that if further details were required, the Proper Officer should have sought them specifically, which was not done. Revenue's Arguments: The judgment does not record any specific arguments made by the Revenue or the respondents.