Proper Officer is Required to Substantiate Why Reply is Unsatisfactory & Provide Opportunity Before Confirming Demand | HC

Case Details: Paras Enterprises v. Union of India - [2024] 159 taxmann.com 657 (Delhi)

Judiciary and Counsel Details

• • Sanjeev Sachdeva & Ravinder Dudeja, JJ.
  • Prabhat Kumar & Utkarsh Kumar, Advs. for the Petitioner. 
  • Raghvendra Shukla & Rajeev Aggarwal for the Respondent.

Facts of the Case

The petitioner was dealing in the manufacturing and sale of electrical goods. The GST authorities had issued a notice and alleged that the petitioner had under-declared its output tax and claimed excess input tax credit. It was also alleged that the petitioner had claimed input tax credit from cancelled dealers, return defaulters and tax non-payers.

The petitioner submitted a detailed reply to the show cause notice and provided full disclosures under each of the heads. But the GST authorities simply dismissed the reply by stating that it was not clear and unsatisfactory and issued a demand order. It filed writ petition against the demand order.

High Court Held

The Delhi High Court noted that the GST authorities should have substantiated why the reply was unsatisfactory and should have given an opportunity to clarify or furnish further documentation. Also, the petitioner was not provided with an adequate opportunity to defend the show cause notice by way of a hearing.

Therefore, the Court held that the impugned order was invalid and directed the GST authorities to re-adjudicate matter again and provide specific details and documents which would be needed from the petitioner and it would furnish the explanation and documents within a week.