Case Title | FEDERAL BANK LTD vs THE ASSISTANT COMMISSIONER DGST |
Court | Delh High Court |
Honorable Judges | JUSTICE SANJEEV SACHDEVA JUSTICE RAVINDER DUDEJA |
Citation | 2024 (02) GSTPanacea 43 HC Delhi W.P.(C) 1960/2024 & CM APPL. 8229/2024 |
Judgment Date | 12-Februay-2024 |
The petitioner is challenging an order dated 27.12.2023, which confirmed a demand against them pursuant to a show cause notice dated 23.09.2023 under Section 73 of the Central Goods and Services Tax Act, 2017.
The petitioner’s senior counsel argues that the notice fixing the hearing on 26.12.2023 at 11:30 AM in Delhi was issued on 24.12.2023 at 20:39, which was impractically short notice given that 25.12.2023 was a holiday due to Christmas. This short notice made it difficult for the petitioner to seek instructions from its head office and adequately prepare for the hearing.
Furthermore, the petitioner contends that they had submitted a detailed reply dated 21.10.2023 to the show cause notice, addressing each allegation comprehensively. However, the impugned order passed on 27.12.2023 lacked clarity as it provided no substantive reasons for its decision, merely stating that the petitioner’s reply was deemed “not clear and satisfactory.”
Upon issuing notice and with the consent of both parties, the petition is taken up for final disposal.
A review of the show cause notice reveals that the Department had outlined specific allegations regarding under-declaration of output tax, excessive claims of Input Tax Credit (ITC), and various other discrepancies related to ITC claims. In response, the petitioner had submitted a detailed reply, providing comprehensive disclosures for each allegation.
However, despite the petitioner’s detailed response, the impugned order criticized the reply as incomplete and unsupported by adequate documentation. The Proper Officer opined that the reply failed to clarify the issues satisfactorily, resulting in the order deeming it unsatisfactory.
In summary, the petitioner challenges the order based on inadequate notice for the hearing and the lack of substantive reasoning provided in the impugned order, despite their comprehensive response to the show cause notice.
The court observed several discrepancies in the handling of the petitioner’s case by the Proper Officer. Firstly, despite deeming the petitioner’s reply incomplete, no opportunity was given to them to provide further details or clarify their response. Additionally, the notice for a hearing was issued only two days before the scheduled date, on a day that was followed by a holiday, which didn’t allow sufficient time for preparation. Consequently, the court concluded that the petitioner was not adequately given the chance to defend themselves against the show cause notice.
As a result of these shortcomings, the court decided to invalidate the order and show cause notice. They directed the matter to be sent back to the Proper Officer for reassessment. The Proper Officer was instructed to inform the petitioner of any additional details or documents required within a week. Upon receiving this information, the petitioner was given another week to provide the necessary explanation and documents. Subsequently, the Proper Officer was directed to re-evaluate the show cause notice within two weeks, providing the petitioner with an opportunity for a hearing.
The court emphasized that its decision didn’t involve an assessment of the merits of either party’s arguments and reserved all rights and contentions for future consideration. Finally, it ordered a copy of the ruling to be provided immediately to the parties involved.
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