Facts of the Case

The Petitioner, Tata Motors Limited, challenged an order dated 30.04.2024 passed by the GST authorities under Section 73 of the CGST Act for Financial Year 2018–19, whereby a demand of ₹23.82 crore (including penalty) was raised.

The Show Cause Notice (SCN) dated 29.01.2024 was primarily based on findings of a Special Audit conducted under Section 66 of the Act. The Petitioner filed a detailed reply dated 21.03.2024 addressing each allegation with supporting documents.

However, the adjudicating authority passed the impugned order without properly considering the reply and summarily concluded that the response was “not satisfactory.”

Issues Involved

  1. Whether an adjudicating authority can pass a demand order without properly considering the detailed reply submitted by the taxpayer.
  2. Whether a non-speaking and cryptic order violates principles of natural justice.
  3. Whether reliance solely on a Special Audit Report without independent application of mind is legally sustainable.

Petitioner’s Arguments

  • The Petitioner submitted that a detailed reply with supporting documents was filed addressing each issue raised in the SCN.
  • The impugned order failed to consider the reply on merits and was passed in a mechanical manner.
  • The Show Cause Notice itself lacked independent reasoning and merely reproduced findings of the Special Audit.
  • The Proper Officer failed to apply his mind and did not provide meaningful opportunity for clarification.

Respondent’s Arguments

  • The Department contended that the reply submitted by the Petitioner was examined and found to be unsatisfactory.
  • It was argued that an opportunity of personal hearing was provided in compliance with Section 75(4) of the Act.
  • The demand was raised in accordance with Section 73(9) of the CGST/DGST Act based on discrepancies identified during audit.

Court’s Findings

  • The Delhi High Court observed that the Petitioner had filed a detailed and structured reply with supporting documents, which required proper consideration.
  • The adjudicating authority merely stated that the reply was “not satisfactory” without providing any reasoning.
  • Such an approach clearly reflected non-application of mind and rendered the order unsustainable.
  • The Court emphasized that an adjudicating authority must evaluate the reply on merits and give reasons for its conclusions.
  • The Court further noted that no additional clarification or documents were sought from the Petitioner despite the availability of such an option. 

Court Order

  • The impugned order dated 30.04.2024 was set aside.
  • The matter was remitted back to the Proper Officer for fresh adjudication.
  • The Petitioner was allowed to file an additional reply within 30 days.
  • The Proper Officer was directed to:
    • Provide an opportunity of personal hearing
    • Pass a fresh speaking order in accordance with law within the prescribed time

Important Clarifications by Court

  • The Court did not express any opinion on the merits of the case.
  • All rights and contentions of both parties were kept open.
  • The challenge to Notification No. 9 of 2023 and 56 of 2023 regarding extension of time was left open.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/62729052024CW81052024_173532.pdf

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