Pratham Security Agency vs. Commercial Tax Officer State Tax And Another

Facts

The petitioner, Pratham Security Agency, filed a writ petition challenging a demand order dated 13.08.2024, issued by the Commercial Tax Officer, Noida, under Section 73 of the Goods and Services Tax Act, 2017. The petitioner argued that the impugned order failed to meet 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 petitioner contended that the order was not self-contained and merely incorporated the show cause notice by reference, without providing any independent reasoning. The respondent tax authorities did not dispute that the issue was covered by a previous judgment of the High Court on a similar matter.

Held

The Court held that the demand order dated 13.08.2024 was unsustainable because it failed to comply with the requirements of Section 75(6) of the Goods and Services Tax Act, 2017. Following the precedent set in M/s Hari Shanker Transport, the Court found that the order did not set out the relevant facts and the basis of the decision, instead merely incorporating the show cause notice by reference. The Court reasoned that even if no response was filed by the petitioner to the show cause notice, it was incumbent upon the proper officer to pass a self-contained order that clearly articulated the facts and the reasoning behind the decision. The ratio decidendi is that an order passed under Section 73 of the GST Act must be a speaking order, detailing the facts and the basis of the decision, and cannot merely refer to previous notices. Consequently, the Court quashed the demand order and remanded the matter back to the respondent authority to provide the petitioner an opportunity to file a response to the show cause notice and thereafter pass a fresh order in accordance with law after providing a hearing.

Key Issues

1. Whether the demand order dated 13.08.2024, 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 contended that the impugned demand order suffers from the same defect as the order in the case of M/s Hari Shanker Transport Vs. Commissioner of Commercial Tax U.P., decided on 11.03.2025. Specifically, the order failed to set out the relevant facts and the basis of the decision, as required by Section 75(6). The order was not self-contained and merely incorporated the show cause notice by reference, rendering it unsustainable. The petitioner relied on the judgment in M/s Hari Shanker Transport. Respondent's arguments: The learned counsel for the respondents attempted to support the impugned order but did not dispute that the issue raised was covered by the judgment in M/s Hari Shanker Transport.