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Navigating the Legal Labyrinth: An In-Depth Analysis of Ipso Facto Clauses and Their Impact on Insolvency Proceedings in India

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Navigating the Legal Labyrinth: An In-Depth Analysis of Ipso Facto Clauses and Their Impact on Insolvency Proceedings in India 

ABSTRACT:  

The ipso facto clause, a contractual stipulation triggered by insolvency events, stands at the crossroads of contract law and insolvency proceedings. This article delves into the multifaceted nature of ipso facto clauses, examining their purpose, legal implications, and the global divergence in their treatment. It highlights the protective intent behind such clauses while scrutinizing their potential to undermine the rehabilitative objectives of insolvency law.  

Through a comparative analysis, the article explores the legislative frameworks from jurisdictions like the EU, US, and India, revealing a spectrum of approaches—from stringent invalidation to cautious enforcement. The Indian legal perspective is given particular attention, considering the evolving jurisprudence and the Supreme Court’s stance on the matter. The article argues for a balanced approach that reconciles the sanctity of contracts with the overarching goals of insolvency resolution, advocating for reforms that align with international best practices while catering to the unique contours of the Indian insolvency landscape. 

OVERVIEW: 

Any system of contractual law must include the freedom to contract. Parties are free to engage into any kind of contract with one another under classical contract law, with the court’s intervention being minimal. Then, even in cases where the contract is unfavourable to any party, they are obligated to abide by it strictly. 

The idea of contract sanctity is defined as a thread that runs through a contract from start to finish, requiring courts to always be watchful to prevent new and established doctrines from serving as a convenient way out of bad deals. deals. Laissez-faire requires the freedom and sanctity of contracts, and courts have an obligation to support and uphold these essential components. 

 INTRODUCTION: 

The classical principle of contracts states that public policy requires that men of full age and competency should have utmost liberty of contracting and that their contracts entered freely and voluntarily must be upheld by the Courts of Justice.1 Unfortunately, a lot of factors have changed and affected this principle in modern times. A contract’s terms are no longer unassailable and can really be examined by the court. Terms that are enforced in standard-form contracts or unreasonable terms seen in consumer contracts are two examples of this.2 

Because they highlight the need for a balance between contractual relationships and insolvency rules, ipso facto clauses have become a hotly debated topic. The purpose of the Insolvency and Bankruptcy Code 2016 (IBC or Code), which is to save corporate debtors (CD) through restructuring, could be thwarted by these clauses. Nonetheless, it is impossible to dispute the significance of these ipso facto terms, which give parties autonomy during the contract-drafting process. The purpose of this article is to clarify the current situation with regard to ipso facto clauses under the IBC and other legal systems. This article then attempts to present a potential course of action for India to take in order to strike the crucial balance between IBC and ipso facto clauses. 

 IPSO FACTO CLAUSE: 

Contractual provisions called “ipso facto” give one party the right, in the event of a default, to end the agreement or change it. These defaults could include specific events like the start of bankruptcy procedures, the appointment of an administrator, or failure to pay debts or fulfil obligations under contracts, among others. It is the intention of ipso facto clauses to shield one party from financial damage in the event that the other party defaults. These clauses, however, have created circumstances where they pose an obstacle to the defaulting party’s successful bankruptcy process. 

A contractual provision known as an ipso facto clause permits one party to alter or cancel the agreement in the event that a certain event relating to another party’s insolvency occurs. 

The purpose of the clause is to shield the parties from the dangers posed by a counterparty’s bankruptcy. By permitting a party to withdraw its obligations, these clauses may run counter to the goals of the bankruptcy process and jeopardise the debtor’s capacity to operate as a going concern.  

If the CD loses a lot of money because a contract it terminated was necessary for it to continue as a “going concern,” it is because an ipso facto clause permits one party to terminate a contract due to the bankruptcy of another party. That’s why it becomes critical that certain contracts that are fundamental to the Corporate Insolvency Resolution Process (CIRP) continue. For ipso facto provisions to be governed, clear laws are therefore required. 

 GLOBAL PERSPECTIVES: 

  • UNCITRAL: The debate is acknowledged in the UNCITRAL Legislative Guide on Insolvency Law, which suggests that such sections in the domestic insolvency regime be invalidated and that the resolution process be prioritised as a “going concern.”3 
  • WORLD BANK: The ipso facto provisions are void under the World Bank’s Principles for Effective Insolvency and Creditor/Debtor Regimes, subject to specific restrictions. 
  • THE EU DIRECTIVE: In the event that the corporate debtor restructures, the EU Directive further limits the implementation of ipso facto terms. 

 THE GOING CONCERN CONCEPT: 

The going concern principle is the main idea at the heart of India’s corporate insolvency resolution process. Operating the firm as a going concern once the insolvency resolution process commences is a clear legislative obligation for both the interim resolution professional and the resolution professional. 

All of the resources, both tangible and intangible, and assets required to carry on independently with a commercial activity—which could be all or a portion of the corporate debtor’s operations—are referred to as “going concern” when no value is placed on any particular resource or asset. The idea that a business should be regarded as though it continues to exist comes from the accounting field.4 

The entire purpose of resolution under the IBC is to preserve and maximise enterprise value, which is why the resolution professional is to keep the business running as a going concern until the CoC approves a resolution plan which ensures that the business keeps going on forever.5 

In addition, the judiciary has taken the initiative to make sure that the corporate debtor has enough money to continue as a going concern. 

The Tribunal found that it is against the going concern principle when banks deny customers the ability to withdraw money for the purpose of paying for employee salaries and the power used in the business. Consequently, the Tribunal issued an order permitting the removal of these monies. The Tribunal instructs the resolution experts that the company must be operated as a going concern at the time of each CIRP’s acceptance. 

 IPSO FACTO CLAUSES AND INSOLVENCY IN INDIA: 

The idea of a going concern is fundamental to Indian insolvency and is a recurring issue throughout the Insolvency and Bankruptcy Code (IBC), as previously discussed. Support from a variety of stakeholders is necessary for the concept that a business should operate forever. 

In order to guarantee that the corporate debtor’s business can be maintained and managed, the Resolution Professional and the interim Resolution Professional have been given many authority. The law mandates that every effort be made to ensure ongoing business enterprise, and protecting and preserving the value of the corporate debtor is a significant component of the Resolution Professional’s duty. Compelling a supplier to comply is impossible if their contract contains an ipso facto clause that makes the same contingent upon their insolvency. 

In general, this makes it far more difficult to manage the corporate debtor as a going concern. It will be very difficult for the Resolution Professional to negotiate into new contracts with suppliers if the core material contracts expire upon insolvency. Even while the Resolution Professional has this authority, it will be challenging to quickly enter into such agreements when the corporate debtor is already going through CIRPS. Suppliers who are unwilling to cooperate can put the corporate debtor in even more difficult circumstances, which will affect all parties involved in the business’s ability to continue as a going concern. 

As of yet, the Indian courts have not encountered a scenario requiring them to handle a clause of this nature in an insolvency-related case. Such a clause has been presented before the NCLT in a liquidation case.6 However, the scholars disagree, nevertheless, that a choice of this nature can be carried over into the CIRP. This is due to the fact that, should the resolution process fail, the liquidation procedure does not incorporate the fundamental tenet of the CIRP—the idea of “going concern.” It is a certain that the company identity will dissolve during the liquidation stage. 

 INVALIDITY OF IPSO FACTO: 

The “doctrine of pro-corporate debtor as going concern bias” is introduced first, outlining the parameters of the ipso facto clause’s invalidity. This doctrine stems from the I&B Code’s provisions (specifically, Section 148) as read, with the Preamble’s stated objectives being (i) maximising asset value; (ii) maintaining the corporate debtor’s ability to continue as a going concern; and (iii) balancing the interests of all stakeholders.  

The “doctrine of pro-corporate debtor as going concern bias,” it can be argued, may not be able to reconcile the conflict between a corporate debtor’s rights during the CIRP (including liquidation) and the terminating party’s contractual right and the contract’s integrity. Even though such a claim seems appealing at first glance, it should be rejected. 

A moratorium is allowed by Section 14, although it is only applicable during the CIRP term. The drawback is that liquidation is not covered by the ipso facto provision, which is only declared void “till the moratorium period”. It is still applicable to maintain the corporate debtor as a going concern during the liquidation process. Second, such a moratorium does not extend to cover those important contracts7 in which the corporate debtor provides commodities and/or services; rather, it only covers transactions in which the corporate debtor obtains necessities. As a result, the overall purpose and spirit of the I&B Code are no longer being upheld. 

 SAFEGUARDS: 

After coming to the conclusion that the ipso facto clause would be invalid, we looked into the extent of this invalidation, specifically whether it was conditional or absolute. We believe that, in order to accomplish the goal of the I&B Code, the ipso facto clause should be treated invalid with retrospective effect, regardless of the date on which it was incorporated into the contract, and that this invalidity should not be dependent upon the introduction of an amendment (which would be nothing more than a clarificatory amendment). 

According to the United Nations Commissions on International Trade Law (UNCITRAL) Guide, national insolvency law supersedes such ipso facto clauses, with some exceptions, as contract performance is essential for CIRP.8 When drafting new rules and regulations or evaluating whether already-existing ones are sufficient, the UNCITRAL Guide was intended to serve as a guide. 

On a similar vein, the World Bank and UNCITRAL Guidelines were also suggested in the 2005 J.J. Irani Expert Committee Report on Company Law.9 It said that maintaining a flat liability curve and increasing the value of the assets are essential. Additionally, the Committee suggested that the ipso facto clause be placed under conditional stay beginning on the day the insolvency application was admitted. Additionally, it clarified that imposing an absolute stay would violate the supplier’s contractual freedom by forcing him to fulfil commitments against his best interests as a business. 

 CONCLUSION: 

Nations that invalidate ipso facto clauses either fully or conditionally score in the top 25 for ease of doing business, according to the Doing Business Report 202031. These nations include Singapore, the United States, Australia, and Germany. Although India is ranked sixty-third, these rankings are determined by considering a number of factors, including the degree to which contracts are enforced and the manner in which insolvency is handled in a given nation. 

India is still far behind in the contract performance category, while having made considerable progress in the insolvency resolution bracket. Moreover, the aforementioned year 2020 ranking would not be maintained by insolvency resolution outside of contract performance. Consequently, it is imperative to nullify the ipso facto clause that ensures contract execution in order to facilitate business transactions in India. 

Observing closely, one finds that the contract generally grants an unrestricted right to any party other than the corporate debtor to terminate, accelerate, or modify the agreement to the detriment of the corporate debtor merely on the basis of filing an application for the start of CIRP, the start of CIRP/liquidation, e.g. Similar circumstances have the potential to impair the corporate debtor’s ability to continue as a going concern, which could ultimately prevent the corporate insolvency resolution process or liquidation process from being as successful as intended by the 2016 Insolvency and Bankruptcy Code. The legislators believe that clarification is necessary, even though Section 14 of the I&B Code offers a limited moratorium to safeguard the corporate debtor in order to accomplish the code’s goal.  

 Written by Riddhi S Bhora 

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Secured Creditors have priority over Tax Authorities under CERSAI : High Court of Bombay

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Case Title : Purushottam Prabhakar Chavan v Deputy Commissioner of Sales Tax(GST)

 Case no : Writ Petition No. 3477 of 2024Purushottam Prabhakar Chavan Versus Deputy Commissioner of Sales Tax (GST)

 Order no : 3rd May, 2024

 Quorum : Hon’ble Justice B.P. Colabawalla & Somashekar Sundareshan JJ

 FACTS OF THE CASE

The Lender bank between the dates of 31st May 2010 and 31st January 2010 provided credit facilities to several properties including Walkeshwar Flats and Nashik Properties. Walkeshwar Flats was owned by Mrs Praffullata Shah and the said property served as security for loan, and after her demise the loans on that property became a non-performing asset. Despite that the lender banks claimed possession over the property by invoking SARFAESI Act.

The DCST claimed the property under MVAT Act due to the taxes owned by one of the borrowers. Recovery proceedings were initiated and the DCST secured the assets. The lender bank registered a mortgage on the property using CERSAI.

Later on the said property was Auctioned and won by the Petitioner but due to conflicting claims the petitioner faced problems getting the ownership of the property. 

ISSUES

Whether as a matter of law, the Petitioner, the auction purchaser of the Walkeshwar Flat under the SARFAESI Act, is a valid recipient of free and marketable title to it ?

 LEGAL PROVISIONS

  1.  Article 226 of the Indian Constitution : Clearly states that every High Court has the powers throughout the territories in relation to which it exercises jurisdiction to issue writ or any order to any person or authority.
  2. Section 37 of Maharashtra Value Added Tax Act, 2002 : would override any provision of contract that creates a charge, it would be subservient to any provision in a Central Act that gives first charge to some other entity
  3.  Section 26-E of the SARFAESI Act : after the commencement of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that Code.

 CONTENTION OF THE PARTIES

The contentions of the Directorate of Commercial Taxes are establishing their right to enforce tax dues against the Walkeshwar Flat, particularly in relation to Bharat Shah’s liability as a partner of SMI in the mortgage of the property. The DSCT argue that Bharat, as a legal heir of Mrs. Praffullata, inherits the property, thereby providing a basis for the DCST to assert their claim against it. However, the petitioner argues against this stance by emphasizing the priority of enforcement established by the Lender Bank through SARFAESI Act, including registration of the mortgage under CERSAI and obtaining physical possession of the said property.

The petitioner contends that the DCST’s attachment orders were after the Lender Bank’s actions and are therefore priority can be established by the Lender Bank’s registered security interest. They rely on the case of Jalgaon Janta, to support their argument that security interests registered with CERSAI take precedence over attachment orders by tax authorities.

Overall, the petitioner asserts that the legal framework supports their claim to priority in enforcement against the Walkeshwar Flat, and any further action by the DCST would be after the rights established by the Lender Bank’s actions under the SARFAESI Act. 

COURT’S ANALYSIS AND JUDGMENT

The court looked into the contentions of both the parties and admitted the Petition with no costs imposed. The court ruled that attachment orders predating January 24, 2020, do not grant priority to the DCST over the Walkeshwar Flat. As the DCST did not register with CERSAI nor issue a proclamation of sale, the Lender Bank’s priority remains intact, passing to Encore ARC. Consequently, the petitioner gains a clear title, unaffected by the DCST’s claim. Any attachment related to tax dues by SMI on the property is nullified, allowing the petitioner to register it unopposed.

 

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 JUDGMENT REVIEWED BY – Nagashree N M

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“High Court Rules: Provision for Refund under Section 6 of Kerala Motor Vehicles Act Applies Only if Tax Was Prepaid and Vehicle Remains Unused”

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Case Title: MUHAMMED SAFEER P. Versus REGIONAL TRANSPORT OFFICER and Others

Case No: 30097 OF 2018

Decided on: 27TH DAY OF MARCH 2024

Quorum: THE HON’BLE MR JUSTICE GOPINATH P

Facts of the case

There is a disagreement in the matter about the motor vehicle tax refund. The petitioner requested a refund under particular conditions, but the senior Government Pleader said that Section 6 of the 1976 Act does not allow for refunds unless the tax was paid on time and the vehicle was not meant to be used for a predetermined amount of time following payment. A notice from the government outlined requirements for tax refunds, including timely tax payment. The court made it clear that certain steps specified in the Act and Rules must be followed in order to file an exemption claim for tax nonpayment while under custody.

Issues

1. Whether dispute over the payment of motor vehicle tax within the prescribed time for a refund claim?

2. Whether the conditions for claiming exemption from tax are detailed, specifying the necessity of timely tax payment for refund eligibility under Section 6 of the 1976 Act?

Legal Provisions

1.Section 6 of the Kerala Motor Vehicle Taxation Act,1976 (hereinafter referred to as the ‘1976 Act’) .

2.Section 11 (2) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the EPF Act)

Appellant’s Contentions

The papers are related to a writ case in which the petitioner requested a reimbursement of motor vehicle taxes for a time when the car was not in use. The petitioner bought a car at an auction, but because of outstanding road tax arrears, he had trouble getting a permit and changing the registration. Relief was refused even after attempts were made to request an exemption and then pay the tax. Citing pertinent parts of the Kerala Motor Vehicle Taxation Act and prior court rulings, the petitioner moved the court to get a refund of the tax paid during the time the vehicle was not in use.

Respondent’s Contentions

The respondent contends that the petitioner is not entitled to a refund of motor vehicle tax since Section 6 of the 1976 Act requires that the tax be paid within the allotted period in order for a refund claim to be approved. Government notifications contain specific terms about refunds, and the Jomon M. Arackal ruling refutes the petitioner’s assertions. Furthermore, because the Nisamudheen ruling deals with the EPF Act, a separate statute, it is not relevant here. According to the respondent, the petitioner does not fulfill the legal requirements for a refund.

Court Analysis and Judgement

The matter involving the motor vehicle tax refund is the subject of the documents that have been given. The petitioner is requesting a reimbursement of the taxes paid within a certain time frame in which the car was not used or kept for use. In granting the petitioner’s request for a refund under Section 6 of the Kerala Motor Vehicle Taxation Act, 1976, the court cites earlier rulings in the cases of Nisamudheen v. The Joint Regional Transport Officer, Jomon M. Arackal v. Tahsildar, and Damodaran v. RTO, Malappuram. The court also addresses the requirements for requesting a refund under Section 6 of the Act, including the need to file an application in advance.

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Judgement Analysis Written by – K.Immey Grace

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“High Court Rules: Provision for Refund under Section 6 of Kerala Motor Vehicles Act Applies Only if Tax Was Prepaid and Vehicle Remains Unused”

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Case Title: MUHAMMED SAFEER P. Versus REGIONAL TRANSPORT OFFICER and Others

Case No: 30097 OF 2018

Decided on: 27TH DAY OF MARCH 2024

Quorum: THE HON’BLE MR JUSTICE GOPINATH P

Facts of the case

There is a disagreement in the matter about the motor vehicle tax refund. The petitioner requested a refund under particular conditions, but the senior Government Pleader said that Section 6 of the 1976 Act does not allow for refunds unless the tax was paid on time and the vehicle was not meant to be used for a predetermined amount of time following payment. A notice from the government outlined requirements for tax refunds, including timely tax payment. The court made it clear that certain steps specified in the Act and Rules must be followed in order to file an exemption claim for tax nonpayment while under custody.

Issues

1. Whether dispute over the payment of motor vehicle tax within the prescribed time for a refund claim?

2. Whether the conditions for claiming exemption from tax are detailed, specifying the necessity of timely tax payment for refund eligibility under Section 6 of the 1976 Act?

Legal Provisions

1.Section 6 of the Kerala Motor Vehicle Taxation Act,1976 (hereinafter referred to as the ‘1976 Act’) .

2.Section 11 (2) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the EPF Act)

Appellant’s Contentions

The papers are related to a writ case in which the petitioner requested a reimbursement of motor vehicle taxes for a time when the car was not in use. The petitioner bought a car at an auction, but because of outstanding road tax arrears, he had trouble getting a permit and changing the registration. Relief was refused even after attempts were made to request an exemption and then pay the tax. Citing pertinent parts of the Kerala Motor Vehicle Taxation Act and prior court rulings, the petitioner moved the court to get a refund of the tax paid during the time the vehicle was not in use.

Respondent’s Contentions

The respondent contends that the petitioner is not entitled to a refund of motor vehicle tax since Section 6 of the 1976 Act requires that the tax be paid within the allotted period in order for a refund claim to be approved. Government notifications contain specific terms about refunds, and the Jomon M. Arackal ruling refutes the petitioner’s assertions. Furthermore, because the Nisamudheen ruling deals with the EPF Act, a separate statute, it is not relevant here. According to the respondent, the petitioner does not fulfill the legal requirements for a refund.

Court Analysis and Judgement

The matter involving the motor vehicle tax refund is the subject of the documents that have been given. The petitioner is requesting a reimbursement of the taxes paid within a certain time frame in which the car was not used or kept for use. In granting the petitioner’s request for a refund under Section 6 of the Kerala Motor Vehicle Taxation Act, 1976, the court cites earlier rulings in the cases of Nisamudheen v. The Joint Regional Transport Officer, Jomon M. Arackal v. Tahsildar, and Damodaran v. RTO, Malappuram. The court also addresses the requirements for requesting a refund under Section 6 of the Act, including the need to file an application in advance.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Judgement Analysis Written by – K.Immey Grace

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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The High Court of Delhi Disposed Petition with Opportunity for Detailed Reply, Personal Hearing : Directs Re-Adjudication of Show Cause Notice

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Case Title – Sun & Sand Industries Africa Pvt. Ltd. Vs. Sales Tax Officer Class-II/ AVATO Department of Trade and Taxes

Case Number – W.P.(C) 5670/2024 & CM APPL. 23433/2024

Order Number – 24th April, 2024

Quorum – Justice Sanjeev Sachdeva and Justice Ravinder Dudeja

FACTS OF THE CASE

In the case of Sun & Sand Industries Africa Pvt. Ltd. Vs. Sales Tax Officer Class-II/ AVATO Department of Trade and Taxes, an order dated 19th December,2023 was challenged by the Appellants, which was duly disposed of a Show Cause Notice dated 23rd September,2023. The Show Cause Notice presented a demand of Rupees 15,19,68,460 against the Appellant under Section 73 of the Central Goods and Service TaxAct, 2017. The notice stated reasons inclusive of excess claim of Input Tax Credit (ITC), scrutiny of the ITC availed, and under-declaration of ineligible ITC. The Appellant provided the response to the notice on the dated 23rd of the October, 2023, seeking the additional time for a detailed reply and a personal hearing. The Appellant provided with a response to the reminder on the dated 18th of December, 2023, seeking further time to furnish a reply and appear for a personal hearing. Furthermore, the Appellant of the said case, replied to the reminder on the dated 18th December,2023, seeking further time to furnish a reply and appear for a personal hearing. However, the impugned order dated 19th of the December, 2023 did not consider the request of the Appellant for the extension of time and was said to be enigmatic.

CONTENTIONS OF THE APPELLANT

  1. The appellant, through their counsel, in the said case contented that even after seeking for additional time for a detailed reply and a personal hearing, the impugned order did not consider the request made by them
  2. The appellant, through their counsel, in the said case relied on the Section 75(5) of the Central Goods and Service Tax Act, 2017, which allows them for adjournment for personal hearings up to three time in the case of proper and sufficient cause shown concerning the same.
  3. The appellant, through their counsel, in the said case contented that they weren’t provided with the opportunity of a personal hearing, which is violative of the principles of natural justice.

CONTENTIONS OF THE RESPONDENT

  1. The respondent, through their counsel, in the said case contented that even after two opportunities provided to the Appellants, they failed to file a detailed reply or appear in person.
  2. The appellant, through their counsel, in the said case contented that no detailed reply was furnished by the Appellants, and the impugned order was justified based on their non-compliance.

LEGAL PROVISIONS

  1. Section 73 of the Central Goods and Services Tax Act, 2017 prescribes the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason of fraud or any wilful-misstatement or suppression of facts
  2. Section 75(5) of the Central Goods and Services Tax Act, 2017 prescribes that the proper officer shall, if sufficient cause is shown by the person chargeable with tax, grant time to the said person and adjourn the hearing for reasons to be recorded in writing, provided that, no such adjournment shall be granted for more than three times to a person during the proceedings.

ISSUES 

  1. The main issue of the case revolved around whether the impugned order denying the request of the Appellant for the extension of the time and a personal hearing was justified?
  2. Whether it was violative of the principles of natural justice in the proceedings?

COURT ANALYSIS AND JUDGMENT

The court in the case of Sun & Sand Industries Africa Pvt. Ltd. Vs. Sales Tax Officer Class-II/ AVATO Department of Trade and Taxes, observed that it is not mandatory for the proper officer to grant them adjournments, even though, Section 75(5) of the Central Goods and Services Tax Act, 2017 allows for up to three adjournments of personal hearings. The court observed that the discretion to adjourn hearings depends on the circumstances of each case and that whether the cause shown is sufficient. The court, in this case, observed the impugned order to be abstruse and agreed with the request of the Appellant for one more opportunity to file a detailed reply. The court set aside the impugned order and the show cause notice is remitted to the proper officer for re-adjudication. The Appellant, in this case, is directed to institute a reply within 30 days, and the proper officer is instructed to re-adjudicate the show cause notice, providing an opportunity for a personal hearing and issuance of a fresh speaking order within the stipulated period of time under Section 75(3) of the Central Goods and Services Tax Act, 2017. The court cited clearly that it has not commented on the merits of the case, and that all rights and contentions of the parties to the case are reserved.

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Judgement Reviewed by – Sruti Sikha Maharana

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