Mother Dairy Fruit And Vegetable Private Limited vs. Sales Tax Officer, Class Ii Ward 207 Zone 11 Delhi & Ors.

Facts

The Petitioner, Mother Dairy Fruit and Vegetable Private Limited, challenged an order dated 23.12.2023, which disposed of a Show Cause Notice dated 23.09.2023 and raised a demand of Rs. 7,95,34,514.00, including penalty, against the petitioner. This order was passed under Section 73 of the Central Goods and Services Tax Act, 2017. The petitioner argued that their detailed reply 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 excess claim of Input Tax Credit (ITC), declaration of ineligible ITC, and ITC claims from cancelled dealers, return defaulters, and tax non-payers. The petitioner had provided a detailed response covering all these heads.

Held

The Court held that the impugned order dated 23.12.2023 is not sustainable. The reasoning was that the Proper Officer failed to apply their mind to the detailed reply submitted by the petitioner. The observation that the reply was "not satisfactory" without a proper consideration of its contents and merits indicated a lack of due diligence. The Court noted that if the Proper Officer found the reply unsatisfactory, they should have sought further clarification or additional documents from the petitioner, an opportunity that was not provided. Therefore, the order was set aside, and the matter was remitted to the Proper Officer for re-adjudication. The Proper Officer is directed to intimate the petitioner about any required details or documents, after which the petitioner shall furnish them. Subsequently, the Proper Officer must re-adjudicate the Show Cause Notice, 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 the contentions of either party, and all rights were reserved. The challenge to Notification No. 9 of 2023 was left open.

Key Issues

1. Whether the impugned order dated 23.12.2023, passed under Section 73 of the Central Goods and Services Tax Act, 2017, is sustainable when it fails to consider the detailed reply filed by the petitioner to the Show Cause Notice dated 23.09.2023? Petitioner's Contention: The petitioner contended that the impugned order is cryptic and unsustainable because it does not adequately consider the detailed reply filed by them. They argued that the Proper Officer merely stated the reply was "not satisfactory" without applying their mind to the merits of the submissions and disclosures made. The petitioner further argued that if the reply was indeed unsatisfactory, the Proper Officer should have sought further clarification or documents, which was not done. Revenue's Contention: The judgment records that the Proper Officer opined the reply was unsatisfactory, stating it was "incomplete, not duly supported by adequate documents, without proper justification and thus unable to clarify the issue." No specific arguments from the revenue's counsel regarding the sustainability of the order were explicitly recorded in the judgment.