Failure to Consider Detailed Reply of Assessee: Delhi HC Orders Re-adjudication of Flawed GST Assessment Order [Read Order]

In a recent ruling, the Delhi High Court has directed re-adjudication as it found the Goods and Services Tax ( GST ) assessment order is flawed. It observed that the proper officer failed to consider the detailed reply of the assessee. The petitioner impugned order, whereby the impugned SCN, proposing a demand of Rs. 44,24,400.00 against the Petitioner has been disposed of and a demand including penalty has been raised against the Petitioner. The order has been passed under Section 73 of the Central Goods and Services Tax Act, 2017 The impugned order, however, after recording the narration, records that the reply uploaded by the taxpayer is incomplete, not supported by adequate documents, unclear and unsatisfactory. It merely stated that

“The taxpayer filed their reply. On scrutiny of the same, it has been observed that the same is not acceptable as incomplete, not duly supported by adequate documents, without proper justification and thus unable to clarify the issue. Since, the reply filed is not clear and satisfactory, the demand of tax and interest conveyed via DRC-O1 is confirmed.” The Proper Officer has expressed that the response provided is inadequate, lacking in supporting documentation, unclear, and unsatisfactory. Mr. Rajesh Jain, representing the petitioner, argued that the petitioner had indeed submitted a comprehensive reply dated 23.10.2023. However, the order dated 30.12.2023 failed to consider this submission, instead issuing a vague and cryptic decision. The petitioner’s counsel contended that the Proper Officer overlooked the prepayment of tax liability under Section 12(2)(b) in conjunction with explanation 2 of the CGST Act. Despite the amount having been settled beforehand,

it was erroneously included in the demand. The court recognized that the impugned order’s assessment was flawed as it disregarded the detailed nature of the petitioner’s reply. The Proper Officer’s failure to delve into the merits of the response and superficial dismissal of it as incomplete and unsupported by relevant documentation indicate a lack of due consideration. Moreover, the court pointed out that if the Proper Officer deemed further details necessary, they should have been specifically requested from the petitioner. However, there is no evidence that such an opportunity was afforded. Consequently, the division bench, comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja, deemed the order untenable and directed its remittance to the Proper Officer for reassessment. Accordingly, the impugned order was overturned, and the matter was remitted for fresh adjudication. The Proper Officer is instructed to notify the petitioner of any additional details or documents required. Upon receipt of such notification, the petitioner must provide the necessary explanations and documents. Subsequently, the Proper Officer will conduct a reevaluation of the Show Cause Notice, affording the petitioner a personal hearing, and issue a new, legally sound decision within the prescribed period under Section 75(3) of the CGST Act. Consequently, the petition was disposed of accordingly.

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