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.