Balaji Medical And Diagnostic Research Centre vs. Union Of INDIA & Ors.

Facts

The petitioner, Balaji Medical and Diagnostic Research Centre, challenged an order dated 27.12.2023, which disposed of a Show Cause Notice dated 23.09.2023 and raised a demand of Rs. 3,09,18,988.00, including penalty, against the petitioner. The order was passed under Section 73 of the Central Goods and Services Tax Act, 2017. The petitioner had filed a detailed reply to the Show Cause Notice on 23.10.2023. The Show Cause Notice had raised issues concerning output tax, excess Input Tax Credit (ITC) claim, ineligible ITC, and ITC claim from cancelled dealers, return defaulters, and tax non-payers. The impugned order stated that the petitioner's reply was not satisfactory without detailed consideration.

Held

The Court held that the impugned order dated 27.12.2023 was not sustainable. The Court found that the Proper Officer had merely stated that the petitioner's reply was unsatisfactory without applying his mind to the detailed reply submitted. The Court noted that if further details were required, the Proper Officer should have sought them specifically from the petitioner, which did not happen. 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 the petitioner about any required details or documents, after which the petitioner would furnish them. The Proper Officer must then re-adjudicate the Show Cause Notice after providing an opportunity for a personal hearing and passing 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 either party's contentions 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 27.12.2023, passed under Section 73 of the Central Goods and Services Tax Act, 2017, is sustainable when it merely states that the petitioner's reply to the Show Cause Notice was unsatisfactory without considering it on merits? Petitioner's contention: The petitioner argued that a detailed reply was filed, but the impugned order was cryptic and did not consider the reply on merits. The petitioner contended that the Proper Officer failed to apply his mind to the submitted reply and did not seek further clarification or documents if the reply was deemed unsatisfactory. Revenue's contention: The judgment does not record any specific arguments made by the respondents (Union of India & Ors.).