FUTURE GENERALI INDIA INSURANCE COMPANY LTD. VS. GOODS & SERVICE TAX OFFICER

The petitioner impugns the Order-in-Original dated 29.04.2024, whereby the impugned Show Cause Notice dated 24.12.2023 proposing a demand of Rs. 7,02,71,577.00/- against the petitioner has been disposed of, and a demand including penalty has been created against the petitioner for the Financial Year 2018-19. The order has been passed under Section 73 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the Act). Issue notice. Notice is accepted by learned counsel appearing for the respondent. With the consent of the parties, the petition is taken up for final disposal today. Learned counsel for the petitioner submits that the petitioner had filed a detailed reply dated 17.01.2024 and an additional reply dated 27.02.2024; however, the impugned order dated 29.04.2024 does not take into consideration the replies submitted by the petitioner and is a cryptic order. Learned counsel for the petitioner further submits that one of the grounds in the Show Cause Notice was that an audit was conducted in respect of the petitioner; however, there was no application of mind by the proper officer for the issuance of the Show Cause Notice, and the Special Audit Report was mechanically applied as one of the grounds in the Show Cause Notice. A perusal of the Show Cause Notice dated 24.12.2023 shows that the Department has simply enclosed the findings of the Special Audit in Form GST ADT-04 and no further reasons were given in the said Show Cause Notice. The Special Audit Report gave findings under separate headings, i.e., Re-availment of ITC as per Rule 42; Difference in ITC availed in GSTR-3B and GSTR-2A; Input tax claimed from cancelled dealers; Non-availability of invoices and supporting documents for verification of ITC availed by the petitioner; and Non-availability of records of brokerage to agents and intermediaries for verification of ITC. To the said Show Cause Notice, detailed replies were furnished by the petitioner, giving responses under each of the heads with supporting documents. However, it appears that the proper officer failed to consider these detailed replies and the supporting documents provided by the petitioner before passing the impugned order. The impugned order is devoid of any detailed reasoning or discussion on the replies and evidence furnished by the petitioner, which clearly indicates a lack of proper application of mind and a failure to consider the petitioner’s submissions. This procedural lapse on the part of the proper officer has resulted in a cryptic and unreasoned order that does not address the substantive issues raised by the petitioner in their replies. Therefore, the petitioner seeks quashing of the impugned Order-in-Original dated 29.04.2024 and the impugned Show Cause Notice dated 24.12.2023, and requests the court to remand the matter back to the proper officer for a fresh decision after considering the detailed replies and supporting documents submitted by the petitioner. The petitioner also prays for the grant of a personal hearing before passing any fresh order in this matter, ensuring a fair and just consideration of their case.

The impugned order, however, after recording the narration, states that the reply uploaded by the taxpayer is not properly replied/filed. It further elaborates, “Whereas, SCN/DRC-01 [See Rule 100(2) & 142(1)(a)] was issued along with complete calculation of Tax/interest liabilities of the Taxpayer under Section 73 of CGST/DGST Act & Rules, 2017, on account of the Special Audit conducted by M/s PVAR & Associates Chartered Accountants authorized Chartered Accountant/Cost Accountant under Section 66 of CGST/DGST Act, 2017 on the basis of documents/information available on GSTN portal and provided by FUTURE GENERAL INDIA INSURANCE COMPANY LTD. On the basis of the observation of the Special Audit, the above said SCN has been issued to the taxpayer. The taxpayer has submitted his reply on the GSTIN portal. The undersigned examined the reply and the documents submitted by found the taxpayer has not properly replied/filed explanation despite of sufficient opportunities provided.” The Proper Officer has opined that the reply is not properly replied/filed. This observation in the impugned order dated 29.04.2024 is not sustainable for the reasons that the replies dated 17.01.2024 and 27.02.2024 filed by the Petitioner are detailed replies with supporting documents. The Proper Officer had to at least consider the reply on its merits and then form an opinion. Merely stating that the reply is not properly replied/filed without any justification clearly shows that the Proper Officer has not applied his mind to the reply submitted by the petitioner. Furthermore, if the Proper Officer was of the view that any further details were required, the same could have been specifically sought from the Petitioner. However, the record does not reflect that any such opportunity was given to the Petitioner to clarify its reply or furnish further documents/details. This procedural lapse on the part of the Proper Officer has resulted in a cryptic and unreasoned order that does not address the substantive issues raised by the petitioner in their replies. The Proper Officer’s failure to consider the detailed replies and supporting documents provided by the petitioner before passing the impugned order demonstrates a lack of proper application of mind and a failure to give the petitioner’s submissions a fair and just consideration. Consequently, the impugned order dated 29.04.2024 cannot be sustained and is set aside. The Show Cause Notice is remitted to the Proper Officer for re-adjudication, directing the Proper Officer to provide a reasonable opportunity to the petitioner, including a personal hearing, and to issue a fresh order within three months from the date of receipt of a copy of this order. The petitioner should be allowed to furnish any additional documents or clarifications necessary for a thorough and fair re-examination of the case. This would ensure that the petitioner’s case is considered on its merits, and a reasoned and just order is passed based on a comprehensive evaluation of all the relevant materials and submissions.

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