Central Goods and Services Tax Act, 2017, Section 73
Constitution of India, 1950, Article 226
Determination of tax--Non-issuance
of show cause notice before passing assessment order--Validity of
Conclusion: Where no
show cause notice was issued to the assessee prior to passing of the assessment
order, the said order was liable to be set aside.
Department raised demand of tax under section 73 of the
CGST Act and the same was set off against blocked Input Tax Credit. The
assessee challenged the said order by filing writ petition before the High
Court contending that no show cause notice or DRC-01 was issued to it prior to
passing of the impugned order. Held: Since no show cause notice
was issued to the assessee prior to passing of order under section 73 of the
Act, the impugned order was set aside.
Decision: In favour
of assessee
IN THE DELHI HIGH COURT
SANJEEV SACHDEVA & RAVINDER DUDEJA
Laxmi Traders v. Pr. Commr. of GST Department of
Trade and Taxes & Anr.
W.P. (C) No. 4977/2024 & CM Appls.
20372-73/2024
5 April, 2024
Petitioner by: V.S. Negi and
Sangeeta Rana, Advocates.
Respondents by: Rajeeev
Agarwal, ASC with Samiksha Jain, Advocate.
Sanjeev Sachdeva, J.
Petitioner impugns order dated 7-2-2024, whereby a demand
has been created against the petitioner and the same has been set off against
blocked ITC.
2. Issue notice. Notice is
accepted by learned counsel appearing for respondents.
3. With the consent of
parties, petition is taken up for final disposal.
4. Learned counsel for
respondent No. 1, under instructions submits that there does not appear to be
any show cause notice or DRC-01 issued to the petitioner prior to passing of
the impugned order.
5. The impugned order is
purportedly an order passed under section 73 of the Central Goods and Services
Tax Act, 2017 ( the Act ), creating a demand.
6. Section 73 of the Act
mandates issuance of show cause notice prior to passing an order creating a
demand. In the instant case, admittedly, no show cause notice was issued to the
petitioner prior to impugned order being passed.
7. A show cause notice dated
16-6-2023 was issued proposing to cancel the GST registration of the
petitioner, however, the said proceedings were dropped by order dated 25-8-2023
upon consideration of the reply of the petitioner.
8. Since no show cause
notice was issued prior to passing of impugned order, on the said technical
ground alone, this order is liable to be set aside. The same is accordingly
quashed.
9. It is clarified that it
would be open to the respondents to pass an appropriate order after giving a
proper show cause notice and an opportunity of personal hearing to the
petitioner.
10. It is clarified that
this Court has neither considered nor commented on the merits of contentions of
either party and the impugned order has been set aside solely on the ground of
infraction of principles of natural justice. All rights and contentions of the
parties are reserved
11. Petition is accordingly
disposed of in the above terms.