CANARA BANK
VERSUS
ASSISTANT COMMISSIONER, DGST
Citation: 2024 taxo.online 624
In the case of Canara Bank v. Assistant Commissioner, DGST (W.P.(C) 4689/2024 & CM APPL. 19233-34/2024), Canara Bank challenged an order dated December 26, 2023, under Section 73 of the Central Goods and Services Tax Act, 2017. The order was based on a show cause notice (SCN) issued on September 25, 2023, which proposed a tax demand of Rs. 20,07,15,517.00, including penalties.
Canara Bank, represented by Senior Advocate Mr. G. Shivadass and his team, argued that the order ignored their detailed reply submitted on October 19, 2023. The bank's reply addressed several allegations in the SCN, including excess claims of Input Tax Credit (ITC), under-declaration of ineligible ITC, ITC related to non-business transactions and exempt supplies, and ITC claimed from canceled dealers and non-payers.
The court, led by Judge Sanjeev Sachdeva, observed that the impugned order merely stated that the reply was incomplete and unsatisfactory without providing substantive reasons. The Proper Officer had summarily dismissed the reply as lacking adequate documents and clarity. This dismissal ignored the detailed responses and documents provided by Canara Bank under the specific categories listed in the SCN. Despite the comprehensive nature of the bank's reply, the order did not reflect any analysis or consideration of these submissions.
Judge Sachdeva noted that if the Proper Officer found the reply insufficient, he should have requested additional details or documents from the petitioner. However, there was no record of such an opportunity being given. This lack of specific feedback and opportunity for clarification demonstrated a significant lapse in procedural fairness. The adjudication process, as highlighted by the judge, must allow taxpayers to adequately clarify or supplement their replies.
Based on these observations, the court ruled that the impugned order was unsustainable. It set aside the order and remanded the matter back to the Proper Officer for re-adjudication. The Proper Officer was directed to inform the petitioner about specific details or documents required, allow the petitioner to submit additional explanations and documents, conduct a personal hearing, and issue a fresh, reasoned order in compliance with the law and within the prescribed period under Section 75(3) of the CGST Act.
The court clarified that it did not comment on the merits of the contentions from either party, leaving all rights and contentions reserved. Additionally, the court deferred the challenge to Notification No. 9 of 2023, regarding the initial extension of time, for future consideration.
This judgment highlights several critical aspects of tax adjudication under the GST framework. It emphasizes the importance of detailed administrative orders that reflect a thorough consideration of all submissions and evidence provided by taxpayers. It underscores the necessity for procedural fairness, ensuring that taxpayers are given fair opportunities to present their case and respond to any deficiencies in their submissions. Furthermore, the judgment reflects the judiciary's role in ensuring adherence to principles of natural justice and procedural fairness, intervening when administrative orders are arbitrary or lacking in detailed reasoning.
This case serves as a reminder to both taxpayers and tax authorities about the importance of maintaining transparency, fairness, and detailed documentation in tax disputes. The court's decision reinforces the need for a diligent and reasoned approach in tax adjudication, promoting confidence in the legal processes governing tax administration.
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