The Delhi High Court has quashed the GST demand of Rs. 8.23 crore imposed on Max Healthcare [Case No. W.P.(C) 3355/2024 & CM APPLs. 13818-20/2024], highlighting a failure to consider the merits of the case.
A bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja emphasized that a proper officer is required to carefully assess the merits of the reply submitted before forming an opinion on its validity.
The decision to rule the reply as devoid of merit suggests a lack of thorough consideration by the proper officer, who seemingly did not engage with the details provided by the applicant.
The taxpayer contested the order stemming from a Show Cause Notice (SCN) that proposed a significant demand against them. The court found the order, which raised a demand of Rs. 8,22,82,330.00 including penalties, to be lacking in detailed reasoning, deeming it a “cryptic order.”
The petitioner highlighted that they had responded to the SCN with a comprehensive reply, detailing disclosures under various headings such as declaration of output tax, excess claim Input Tax Credit (ITC), declaration of ineligible ITC, and ITC claims related to cancelled dealers, return defaulters, and tax non-payers.
In response to the Court’s findings, the bench directed the proper officer to inform the applicant of any additional information or documents required. Once this information is provided, the petitioner will have an opportunity to furnish the necessary explanations and documents.
Following this, the Proper Officer will review the SCN afresh, offering the petitioner a chance for a personal hearing. A new and detailed order under the law will then be issued within the specified period as per Section 75(3) of the Central Goods and Services Tax Act, 201.
This decision by the Delhi High Court serves as a reminder of the importance of thorough consideration and due process in matters concerning tax demands. It underscores the need for proper engagement with responses from taxpayers, ensuring a fair and just outcome for all parties involved.
To Access the GSTN Advisory No. 626 dated 5 March 2024 CLICK HERE
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