Aarem Tradex Pvt Ltd  vs Sales Tax Officer

The petitioner impugns the order dated 22.12.2023, whereby the proceedings under Section 73 of the Central Goods and Services Tax (CGST) Act 2017 have been concluded, and a demand has been created against the petitioner. Learned counsel for the petitioner submitted that the petitioner had, on account of an error, claimed Integrated GST credit instead of CGST and SGST credit, which was a mere bonafide clerical error. He submitted that the amount is still lying to the credit of the petitioner and that the petitioner had duly informed the authorities of the same in response to the Show Cause Notice. He further submitted that the impugned order does not record any finding on the said reply or even advert to the reply filed by the petitioner. It merely states that the reply was not found comprehensive. It is noticed that the order dated 22.12.2023 records that “Since no payment has been made within 30 days of the issue of the notice by you; therefore, on the basis of documents available with the department and information furnished by you, if any, demand is created for the reasons and other details attached in annexure.” Further, the observation in the impugned order dated 22.12.2023 is not sustainable for the reason that the reply filed by the petitioner is a detailed reply. The proper officer had to at least consider the reply on merits and then form an opinion on whether the explanation was sufficient or not. He merely held that “since no payment has been made within 30 days of the issue of notice by you and no proper reply/explanation has been received,” which ex-facie shows that the proper officer has not even looked at the reply submitted by the petitioner. This procedural oversight and failure to consider the detailed response from the petitioner not only highlight a significant flaw in the administrative process but also underscore the necessity for a more meticulous and judicious approach in handling such matters. The petitioner’s counsel has rightly pointed out that the clerical error in claiming the wrong type of GST credit should have been considered in light of the comprehensive explanation provided. The proper officer’s disregard for the petitioner’s reply indicates a lack of due process and a failure to engage with the substance of the petitioner’s defense. Therefore, the impugned order, having been issued without due consideration of the petitioner’s detailed response, is fundamentally flawed and should be set aside to ensure justice and procedural fairness. The matter warrants a thorough re-evaluation, taking into account the petitioner’s explanations and the clerical nature of the error, to arrive at a fair and just conclusion.

Accordingly, the impugned order, being bereft of any reasoning, is not sustainable and is set aside. The matter is remitted to the proper officer to re-adjudicate the Show Cause Notice after giving an opportunity of personal hearing to the petitioner. At the request of learned senior counsel for the petitioner, we permit the petitioner to file an additional reply to the Show Cause Notice within a period of one week from today. This opportunity will allow the petitioner to present any further information or clarification that may assist in the re-adjudication process, ensuring that all aspects of the case are thoroughly examined and considered. The challenge to the subject notifications raised by the petitioner is left open, meaning that the petitioner retains the right to contest these notifications in the future if necessary. This provision ensures that the petitioner’s legal options remain intact, and they are not precluded from raising any additional issues that may arise as a result of the re-adjudication process. The petition is allowed in the above terms, with specific directions for re-adjudication and the opportunity for the petitioner to provide additional submissions. This course of action is intended to rectify the procedural shortcomings observed in the initial adjudication, thereby promoting a fair and just resolution of the matter. The proper officer is expected to approach the re-adjudication process with due diligence, taking into account all submissions and evidence presented by the petitioner. This includes a thorough examination of the clerical error initially highlighted and any other relevant information that the petitioner may provide in their additional reply. The requirement for a personal hearing ensures that the petitioner has a full and fair opportunity to present their case, and it obligates the proper officer to engage directly with the petitioner’s arguments and evidence. This step is crucial for ensuring that the final decision is well-reasoned and reflects a comprehensive understanding of the case’s specifics. The decision to allow the petitioner to file an additional reply underscores the commitment to due process and the importance of ensuring that all relevant information is considered before reaching a final decision. It is expected that this additional reply will provide further clarity and support for the petitioner’s position, aiding the proper officer in making an informed decision. By leaving the challenge to the subject notifications open, the court acknowledges the ongoing nature of the legal issues involved and the possibility that further judicial intervention may be required depending on the outcome of the re-adjudication. This ensures that the petitioner is not disadvantaged by the current proceedings and retains the ability to seek further redress if necessary. In conclusion, the court’s order aims to address the deficiencies in the initial adjudication, providing a structured and fair process for re-evaluation. The petitioner is given a clear path to present their case fully, and the proper officer is instructed to conduct the re-adjudication with the necessary thoroughness and attention to detail. This approach is designed to ensure a just and equitable resolution, upholding the principles of natural justice and procedural fairness. The petition is thus allowed, subject to the specified terms, and the matter is remitted for re-adjudication with clear instructions for the proper officer and protections for the petitioner’s rights.

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Aarem Tradex Pvt. Ltd.

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Delhi High Court 

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GST Case Law