M/S Shree Ram Trading Company Through Its Proprietor Manish Kumar Garg vs. The Deputy Commissioner

Held

The Court held that the impugned order dated 2.4.2024, passed by the Deputy Commissioner, was liable to be set aside. The Court found that the impugned order itself, in paragraphs 23 and 24, lacked details of the suppliers whose registrations had been cancelled. The Court reasoned that without supplying this crucial list, the petitioner was indeed not in a position to provide an effective reply to the show-cause notice, thus violating the principles of natural justice. The ratio decidendi is that a tax authority must provide all relevant information, including the identity of suppliers whose registrations are cancelled, to the assessee to enable them to furnish a proper and effective response to a show-cause notice concerning the availment of Input Tax Credit. Consequently, the Court set aside the impugned order and remitted the matter back to the respondent No.1 for a fresh decision after supplying the names of the suppliers to the petitioner.

Facts

The petitioner, M/s Shree Ram Trading Company, engaged in wholesale/retail of oilcakes and cereals, availed Input Tax Credit (ITC) amounting to Rs. 1,44,20,789/- for the period 2018-19. Subsequently, the Deputy Commissioner issued a notice alleging wrongful availment of ITC due to the cancellation of registration of certain suppliers. A second show-cause notice was issued for excess ITC of Rs. 30,74,653/-. The petitioner requested the list of suppliers whose registrations were cancelled to provide an effective reply. The respondent authorities proceeded to pass an order for recovery of tax and penalty without supplying this list. The petitioner filed a writ petition seeking to quash this order.

Key Issues

1. Whether the impugned order dated 2.4.2024, passed under Section 73 of the CGST/SGST Act, 2017, is liable to be quashed for non-compliance with principles of natural justice, specifically for failure to provide the list of suppliers whose registrations were cancelled, thereby preventing the petitioner from submitting an effective reply? Petitioner's contention: The petitioner argued that without being provided with the names of the suppliers whose registrations had been cancelled, they were unable to submit an effective reply to the show-cause notices. They contended that this failure by the respondents vitiated the entire proceeding and the consequent order. Revenue's contention: The judgment records that upon instructions, the counsel for the respondents submitted that prima facie it appeared the list of suppliers was not provided to the petitioner. No further arguments were recorded for the revenue.