Jullundur Motor Agency Delhi Limited vs. Union Of INDIA & Ors.
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The Petitioner, Jullundur Motor Agency Delhi Limited, challenged an order dated 30.12.2023, which disposed of a Show Cause Notice dated 29.09.2023 and raised a demand of Rs. 2,23,79,924.00, including penalty, under Section 73 of the Central Goods and Services Tax Act, 2017. The Petitioner had filed detailed replies on 27.10.2023 and 28.11.2023, and an authorized representative attended a personal hearing. The impugned order stated that the Petitioner's reply was incomplete, not supported by adequate documents, unclear, and unsatisfactory. The demand was raised, in part, due to the claim of Input Tax Credit (ITC) from a cancelled dealer, M/s Rane Brake Lining Limited, whose GST registration was later restored.
Held
The Court held that the impugned order dated 30.12.2023 is not sustainable. The reasoning was that the Proper Officer failed to apply their mind to the detailed replies submitted by the Petitioner. The observation that the reply was "not duly supported by adequate documents, not clear and not satisfactory" was considered ex-facie insufficient. The Court noted that if the Proper Officer found the reply unclear or unsatisfactory, they should have sought specific clarifications or additional documents from the Petitioner, which was not done. The Court also took note of the subsequent restoration of the GST registration of M/s Rane Brake Lining Limited. Consequently, the impugned order was set aside, and the matter was remitted to the Proper Officer for re-adjudication. The Proper Officer was directed to intimate the Petitioner about any required details or documents, after which the Petitioner would furnish them. The Proper Officer is 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 explicitly stated it had not commented on the merits of the contentions of either party.
Key Issues
1. Whether the impugned order dated 30.12.2023, passed under Section 73 of the Central Goods and Services Tax Act, 2017, is sustainable when it fails to consider the detailed replies filed by the Petitioner and makes a cryptic observation that the reply is unsatisfactory? Petitioner's Contentions: The Petitioner argued that the impugned order is unsustainable because the Proper Officer did not apply their mind to the detailed replies filed by the Petitioner. The order merely stated the reply was unsatisfactory without specific reasons or analysis. The Petitioner further contended that if the Proper Officer required further clarification or documents, they should have been specifically sought from the Petitioner, an opportunity that was not provided. The Petitioner also highlighted that the GST registration of the dealer from whom ITC was claimed, M/s Rane Brake Lining Limited, has since been restored. Respondents' Contentions: The judgment does not record any specific contentions made by the Respondents (Union of India & Ors.).
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 30.12.2023, whereby the impugned Show Cause Notice dated 29.09.2023, proposing a demand against the petitioner has been disposed of and a demand of Rs. 2,23,79,924.00 including penalty has been raised against the W.P. (C) 3950/2024 petitioner. The order has been passed under Section 73 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the Act).
Learned counsel for Petitioner submits that a detailed reply dated 27.10.2023 was filed to the Show Cause Notice and pursuant to the reply an authorized representative of the Petitioner attended the personal hearing and provided further clarification. Further, in continuation to the reply dated 27.10.2023, another reply dated 28.11.2023 was filed by the Petitioner. However, the impugned order dated 30.12.2023 does not take into consideration the reply submitted by the petitioner and is a cryptic order.
Perusal of the Show Cause Notice shows that the Department has given separate headings under declaration of output tax, excess claim Input Tax Credit [“ITC”], and ITC claimed from cancelled dealers, returns defaulters and Tax non payers. To the said Show Cause Notice, detailed replies were furnished by the petitioner giving full disclosures under each of the heads.
The impugned order, however, after recording the narration, records that the reply uploaded by the tax payer is not duly supported by adequate documents, not clear and not satisfactory. It merely states that “However, during the personal hearing, the taxpayer reiterated the contents of the reply filed in form DRC-06. On scrutiny of the same, it has been observed that the same is incomplete, not duly supported by adequate documents and unable to clarify the issue. Since, the reply filed is not clear and satisfactory, the demand of tax W.P. (C) 3950/2024 and interest conveyed via DRC-01 is confirmed.” The Proper Officer has opined that the reply is not clear and unsatisfactory.
Learned counsel for petitioner submits that a demand has been raised on account of claim of Input Tax Credit from the cancelled dealer M/s Rane Brake Lining Limited. He further submits that the GST registration of M/s Rane Brake Lining Limited has been restored vide order dated 16.02.2024 in W.P. (C) 2259/2024. 6. The observation in the impugned order dated 30.12.2023 is not sustainable for the reasons that the reply filed by the petitioner is a detailed reply. Proper Officer had to at least consider the reply on merits and then form an opinion whether the reply was unsatisfactory, incomplete and not duly supported by adequate documents. He merely held that the reply is not duly supported by adequate documents, 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 the reply is not clear and unsatisfactory and if 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 order 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. The W.P. (C) 3950/2024 matter is remitted to the Proper Officer for re-adjudication.
As noticed hereinabove, the impugned order records that it is incomplete, not duly supported by adequate documents. Proper Officer is directed to intimate to the petitioner details/documents, as maybe required to be furnished by the petitioner. Pursuant to the intimation being given, petitioner shall furnish the requisite explanation and documents. 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.
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 01, 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.