Delhi HC Grants Relief to Logistics Firm, Criticizes ‘Template’ GST Orders and Stresses Fair Adjudication of SCN

Delhi High Court has relieved the logistics company dissatisfied with the GST assistant commissioner’s decision, rejecting its answer to a Show Cause notice through a template order.

A division bench of Justices Prathiba M. Singh and Amit Sharma noted that an SCN seeking to assess other liabilities (including penalties) on the taxpayers must be decided on the merits.

The applicant issued a Show-cause notice alleging the wrong output tax declaration. The applicant filed a reply to the SCN, but the assistant commissioner discarded it, allegedly without any cause.

Delhi High Court marked that the order has just recorded that the explanation provided in the reply of the taxpayer is “not comprehensible, conceivable, not perspicuous and is ambiguous”.

It thus expressed,

“the impugned order lacks reasons and also lacks any application of mind to the reply given by the Petitioner. Show-cause notices which seek to impose further liabilities upon assesses, including, penalties etc,. have to be decided on merits and not in such a cavalier manner.”

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It was argued by the applicant that even in the past the same template orders have been passed.

It was marked by the court that these illustrations, the matter of ICICI Lombard General Insurance Co. Ltd v. Union of India and Ors. (2024) where the final order passed by the GST department u/s 73 of the CGST Act came to be set aside for “perfunctorily” brushing aside the reply of the taxpayer to SCN.

In Xerox India Limited v. Assistant Commissioner, Ward 208 (Zone11) DGST and Anr. (2024) the HC discovered that the Assistant Commissioner opted for a template in which the mere reason provided was that the reply furnished was “not comprehensible, conceivable, not perspicuous and is ambiguous”.

It carried that “This clearly exhibits an abject non-application of mind and the officer repeatedly employing identical phraseology to deal with such matters.”

As per that the impugned order was set aside and the assistant commissioner was asked to regard the Show Cause Notices (SCN) afresh under the reply provided via the applicant and pass a proper, reasoned order.