Delhi HC Quashes GST Order Against Federal Bank as No Opportunity Given to Reply SCN

The Delhi High Court set aside the order and Show Cause Notice concerning Federal Bank Ltd alleging an illegal Input Tax Credit ( ITC ) Claim.

The Goods and Service Tax (GST) order was issued without furnishing sufficient chance to answer the SCN. order dated 27.12.2023, whereby the SCN on 23.09.2023, offering a demand against the applicant has been confirmed. Under Section 73 of the Central Goods and Services Tax Act, 2017 the order has been passed.

Senior Counsel for the petitioner furnished that notice was issued dated 24.12.2023 at 20:39, fixing a hearing date on 26.12.2023 at 11:30 AM in Delhi High Court. He provides that 25.12.2023 was a Christmas holiday and, time was less for the applicant to take instructions from its head office and appear for hearing.

In a very cryptic way, the impugned order on 27.12.2023 was passed without providing any reason and it just mentions that “reply is not clear and satisfactory”.

In the show cause notice the department has provided particular information about the alleged under declaration of the output tax, excess claim ITC, under declaration of ineligible ITC, and Input Tax Credit claim from cancelled dealers, return defaulters, and tax non-payers. To the expressed SCN, a detailed reply was provided via the applicant providing full disclosures under each of the authorities.

Recording the narration of the impugned order records that the answer uploaded via the assessee is not complete and not duly assisted via sufficient documents incapable of clarifying the problems and the proper officer has the idea that the answer is unclear.

The Court observed that “In case the Proper Officer was of the view that reply is incomplete and further details were required, the same could have been sought from the petitioner, however, the record does not reflect that any such opportunity was given to the petitioner to clarify its reply or furnish further documents/details.”

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As per the court, enough chance has been allocated to the applicant for defending the SCN via the hearing method. The division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja while permitting the petition remitted the case to the Proper Officer for readjudication. The impugned order and show cause notice was set aside.