ITC Claim Rejected by Proper Officer Without Allowing Proper Opportunity to Hearing: Delhi HC sets aside Order passed u/s 73 of CGST Act [Read Order]

The Delhi High Court set aside the order passed under section 73 of the Central Goods and Service Tax ( CGST )Act, 2017 which rejected the claim of Input Tax Credit ( ITC ) by the proper officer without allowing the proper opportunity for a hearing. Mother Dairy Fruit And Vegetable Private Limited, the petitioner challenged the order whereby the impugned Show Cause Notice proposing a demand against the petitioner has been disposed of and a demand of Rs. 7,95,34,514.00 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 Act ).

Counsel for Petitioner submitted that a detailed reply was filed to the Show Cause Notice, however, the impugned order does not take into consideration the reply submitted by the petitioner and is a cryptic order. A perusal of the Show Cause Notice shows that the Department has given separate headings, inter alia, excess claim Input Tax Credit [ “ITC” ], under declaration of ineligible ITC and ITC claim from cancelled dealers, return defaulters and tax non-payers. To the said Show Cause Notice, a detailed reply was furnished by the petitioner giving full disclosures under each of the heads. The impugned order recorded that the reply uploaded by the taxpayer was not satisfactory.

It merely states that “And whereas, the taxpayer had filed their objections/reply in DRC-06 and appeared personally. However, during the personal hearing, the taxpayer reiterated the contents of the reply filed in form DRC-06. On scrutiny of the same, it has been observed that the same is not acceptable being incomplete, not duly supported by adequate documents, without proper justification and thus unable to clarify the issue..” The Proper Officer has opined that the reply is unsatisfactory.

A division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja observed that the Proper Officer had to at least consider the reply on merits and then form an opinion on whether the reply was not clear and unsatisfactory. He merely held that the reply is not clear and satisfactory which ex-facie shows that the Proper Officer has not applied his mind to the reply submitted by the petitioner. The court remitted the matter to the Proper Officer for re-adjudication and set aside the order. To Read the full text of the Order CLICK HERE

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