The High Court of Delhi Disposed Petition with Opportunity for Detailed Reply, Personal Hearing : Directs Re-Adjudication of Show Cause Notice

Case Title – Sun & Sand Industries Africa Pvt. Ltd. Vs. Sales Tax Officer Class-II/ AVATO Department of Trade and Taxes

Case Number – W.P.(C) 5670/2024 & CM APPL. 23433/2024

Order Number – 24^th April, 2024

Quorum – Justice Sanjeev Sachdeva and Justice Ravinder Dudeja

FACTS OF THE CASE

In the case of Sun & Sand Industries Africa Pvt. Ltd. Vs. Sales Tax Officer Class-II/ AVATO Department of Trade and Taxes, an order dated 19^th December,2023 was challenged by the Appellants, which was duly disposed of a Show Cause Notice dated 23^rd September,2023. The Show Cause Notice presented a demand of Rupees 15,19,68,460 against the Appellant under Section 73 of the Central Goods and Service TaxAct, 2017. The notice stated reasons inclusive of excess claim of Input Tax Credit (ITC), scrutiny of the ITC availed, and under-declaration of ineligible ITC. The Appellant provided the response to the notice on the dated 23^rd of the October, 2023, seeking the additional time for a detailed reply and a personal hearing. The Appellant provided with a response to the reminder on the dated 18^th of December, 2023, seeking further time to furnish a reply and appear for a personal hearing. Furthermore, the Appellant of the said case, replied to the reminder on the dated 18^th December,2023, seeking further time to furnish a reply and appear for a personal hearing. However, the impugned order dated 19^th of the December, 2023 did not consider the request of the Appellant for the extension of time and was said to be enigmatic.

CONTENTIONS OF THE APPELLANT

1. The appellant, through their counsel, in the said case contented that even after seeking for additional time for a detailed reply and a personal hearing, the impugned order did not consider the request made by them
2. The appellant, through their counsel, in the said case relied on the Section 75(5) of the Central Goods and Service Tax Act, 2017, which allows them for adjournment for personal hearings up to three time in the case of proper and sufficient cause shown concerning the same.
3. The appellant, through their counsel, in the said case contented that they weren’t provided with the opportunity of a personal hearing, which is violative of the principles of natural justice.

CONTENTIONS OF THE RESPONDENT

1. The respondent, through their counsel, in the said case contented that even after two opportunities provided to the Appellants, they failed to file a detailed reply or appear in person.
2. The appellant, through their counsel, in the said case contented that no detailed reply was furnished by the Appellants, and the impugned order was justified based on their non-compliance.

LEGAL PROVISIONS

1. Section 73 of the Central Goods and Services Tax Act, 2017 prescribes the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason of fraud or any wilful-misstatement or suppression of facts
2. Section 75(5) of the Central Goods and Services Tax Act, 2017 prescribes that the proper officer shall, if sufficient cause is shown by the person chargeable with tax, grant time to the said person and adjourn the hearing for reasons to be recorded in writing, provided that, no such adjournment shall be granted for more than three times to a person during the proceedings.

ISSUES 

1. The main issue of the case revolved around whether the impugned order denying the request of the Appellant for the extension of the time and a personal hearing was justified?
2. Whether it was violative of the principles of natural justice in the proceedings?

COURT ANALYSIS AND JUDGMENT

The court in the case of Sun & Sand Industries Africa Pvt. Ltd. Vs. Sales Tax Officer Class-II/ AVATO Department of Trade and Taxes, observed that it is not mandatory for the proper officer to grant them adjournments, even though, Section 75(5) of the Central Goods and Services Tax Act, 2017 allows for up to three adjournments of personal hearings. The court observed that the discretion to adjourn hearings depends on the circumstances of each case and that whether the cause shown is sufficient. The court, in this case, observed the impugned order to be abstruse and agreed with the request of the Appellant for one more opportunity to file a detailed reply. The court set aside the impugned order and the show cause notice is remitted to the proper officer for re-adjudication. The Appellant, in this case, is directed to institute a reply within 30 days, and the proper officer is instructed to re-adjudicate the show cause notice, providing an opportunity for a personal hearing and issuance of a fresh speaking order within the stipulated period of time under Section 75(3) of the Central Goods and Services Tax Act, 2017. The court cited clearly that it has not commented on the merits of the case, and that all rights and contentions of the parties to the case are reserved.

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Judgement Reviewed by – Sruti Sikha Maharana

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