M/S Azim Traders vs. State Of U.P. And Another

Facts

The petitioner, M/s Azim Traders, filed a writ petition challenging a demand order dated 23.08.2024 issued by the Deputy Commissioner, State Tax, Sector-2, Siddharthnagar, under Section 73 of the Goods and Services Tax Act, 2017. The petitioner contended that the impugned order failed to comply with the requirements of Section 75(6) of the Act, which mandates that the proper officer's order must set out the relevant facts and the basis of the decision. The respondent-State supported the order but did not dispute that the issue was covered by a previous judgment of the High Court in M/s Hari Shanker Transport Vs. Commissioner of Commercial Tax U.P. The impugned order, similar to the one in the cited case, allegedly incorporated the show cause notice by reference without providing independent reasoning.

Held

The Court held that the demand order dated 23.08.2024, issued by the Deputy Commissioner, State Tax, was unsustainable. Following the precedent set in M/s Hari Shanker Transport Vs. Commissioner of Commercial Tax U.P., the Court found that the impugned order, like the one in the cited case, did not contain any independent reasoning. Instead, it merely incorporated the show cause notice by reference, failing to set out the relevant facts and the basis of the decision as required by Section 75(6) of the Goods and Services Tax Act, 2017. The Court reiterated that even if no response was filed to the show cause notice, the proper officer is still obligated to pass a self-contained order that explains the basis of the decision. Therefore, the order was quashed and set aside. The matter was remanded back to the respondent No.2, who was directed to provide the petitioner an opportunity to file a response to the show cause notice within four weeks. Subsequently, after providing an opportunity of hearing, a fresh order in accordance with the law was to be passed.

Key Issues

1. Whether the demand order dated 23.08.2024, issued under Section 73 of the Goods and Services Tax Act, 2017, is liable to be quashed for non-compliance with the mandatory requirements of Section 75(6) of the Act. Petitioner's arguments: The petitioner argued that the demand order dated 23.08.2024 suffers from the same defect as the order in the case of M/s Hari Shanker Transport (supra). Specifically, the order fails to set out the relevant facts and the basis of the decision as mandated by Section 75(6) of the Act. The petitioner contended that merely incorporating the show cause notice by reference does not fulfill the statutory requirement of a self-contained order and therefore, the order should be set aside and the matter remanded. Respondent's arguments: The learned counsel for the respondents attempted to support the impugned order but did not dispute that the issue raised by the petitioner was covered by the judgment in M/s Hari Shanker Transport (supra).