Demand to be set aside when reply could not be filed due to serious illness

Case Title: Anita Bansal v. Union of India

Court: High Court of Delhi

Petition Number: W.P. (C) No. 4520 of 2024, CM Appl. Nos. 18438-18439 of 2024

Date of Judgement: April 8, 2024

Category of Dispute: Input Tax Credit (ITC)

Relevant Section: Section 73, Section 75(3) and 75(4) of the CGST Act, 2017

Facts of the Case [¶1–7]:

1. The Petitioner, Anita Bansal, challenged an order dated 30.12.2023 passed under Section 73 of the CGST Act, which finalized a demand of ₹21,11,088 including penalty, pursuant to a Show Cause Notice (SCN) dated 23.09.2023 alleging excess claim of ITC [¶1, ¶4].
2. The order recorded that the Petitioner did not file any reply to the SCN or appear for personal hearing despite being given repeated opportunities, including a reminder via the GST portal [¶5].
3. The Petitioner contended that she could not respond due to the critical illness and subsequent death of her husband on 20.12.2023, who had been hospitalized since 04.11.2023 [¶6–7].

Questions in Consideration [¶1, ¶8]:

• Whether the ex-parte assessment order issued due to non-response to the SCN was justified despite the Petitioner being prevented from replying owing to personal tragedy?
• Whether principles of natural justice were violated warranting remand of the matter?

Observations of the Court [¶8–10]:

1. The Court acknowledged the death of the Petitioner’s husband as a valid cause preventing her from responding to the SCN and participating in the hearing process [¶8].
2. It was held that the impugned order was passed solely due to non-filing of reply and was thus in breach of natural justice [¶8–9].
3. The matter deserved remand to the Proper Officer for fresh adjudication after providing the Petitioner an opportunity to file a reply and attend personal hearing [¶9–10].

Judgement of the Court [¶9–12]:

1. The ex-parte order dated 30.12.2023 was set aside and the matter remanded to the Proper Officer for fresh adjudication in accordance with Section 75(3) of the CGST Act [¶9].
2. The Petitioner was directed to file a reply to the SCN within 30 days from the date of judgment [¶10].
3. The Proper Officer was directed to pass a fresh speaking order after granting an opportunity of personal hearing [¶10].
4. The challenge to Notification No. 9 of 2023 was kept open for adjudication in appropriate proceedings [¶11].

Between Fine Lines:

• The High Court reinstated natural justice by recognizing genuine personal hardship as valid grounds for non-compliance with procedural timelines.
• Ex-parte orders passed merely due to procedural default, without assessing the reasons, are liable to be quashed.
• The Court prioritized fair opportunity over technical lapses in GST adjudication.
• Proper Officer must now re-evaluate the SCN afresh after granting a personal hearing.
• Taxpayers must ensure timely submissions, but legitimate hardship may invoke judicial indulgence.

Summary of Referred Cases:

Takeaway:

“Natural Justice Prevails Over Procedural Rigidity in GST ITC Dispute”