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Case title: Canara Bank v. Assistant Commissioner, DGST

Case no.:  W.P.(C) 4689/2024 & CM APPL. 19233-34/2024

Order on: 2nd April 2024

Coram: Hon’ble Mr. Justice Sanjeev Sachdeva & Hon’ble Mr. Justice Ravinder Dudeja

FACTS OF THE CASE

In the High Court of Delhi, a significant judgment was delivered on April 2, 2024, in the case of W.P.(C) 4689/2024 involving Canara Bank and the Assistant Commissioner, DGST. The case revolved around a disputed show-cause notice dated 25.09.2023, proposing a substantial demand against the petitioner under Section 73 of the Central Goods and Services Tax Act, 2017. The court’s meticulous analysis of the facts and legal submissions led to a pivotal decision that merits closer examination.

Canara Bank challenged an order dated 26.12.2023, whereby the impugned show-cause notice proposing a demand of Rs.20,07,15,517.00 against the bank was disposed of, and a demand including penalty was raised. The bank had submitted a detailed reply dated 19.10.2023 to the show-cause notice, providing full disclosures under each of the heads mentioned in the notice. However, the impugned order dismissed the reply as incomplete, unsupported by adequate documents, and unsatisfactory.

CONTENTIONS OF THE PETITIONERS

• Canara Bank, represented by Mr. G. Shivadass, Senior Advocate, argued that their reply to the show-cause notice was comprehensive and should have been considered on its merits.
• They contended that the order was cryptic and failed to address the points raised in their reply.

CONTENTIONS OF THE RESPONDENTS

• The Assistant Commissioner, DGST, represented by Mr. Rajiv Aggarwal, ASC, defended the impugned order, asserting that the petitioner’s reply was inadequate and unsatisfactory.

LEGAL PROVISIONS

Section 73 of the Central Goods and Services Tax Act, 2017 – Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful-misstatement or suppression of facts.

ISSUE – The primary issue before the court was whether the impugned order dismissing the petitioner’s reply as incomplete and unsatisfactory was valid.

COURT’S ANALYSIS AND JUDGEMENT

Upon careful consideration of the submissions and perusal of the show-cause notice and the petitioner’s reply, the court found the impugned order untenable. Despite the petitioner’s detailed response, the order summarily dismissed it without proper consideration. The court noted that the Proper Officer had not applied his mind to the petitioner’s submissions and failed to seek further clarification if needed.

Consequently, the court set aside the impugned order and remitted the matter to the Proper Officer for re-adjudication. The Proper Officer was directed to intimate the petitioner regarding any additional details or documents required and provide an opportunity for a fresh hearing. The court clarified that it had not adjudicated on the merits of the case, leaving all rights and contentions of the parties reserved.

The judgment in W.P.(C) 4689/2024 underscores the importance of proper adjudication and due process in tax matters. It emphasizes the need for authorities to carefully consider the submissions made by taxpayers and provide them with a fair opportunity to present their case. By setting aside the impugned order and directing a re-adjudication, the court upheld the principles of natural justice and procedural fairness.

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Judgement Reviewed by – Chiraag K A

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