Amit Upadhyay v. Sales Tax Officer Class II / AVATO, Ward-45 & Anr.

High Court of Delhi | W.P.(C) 4662/2024 | Decision dated 01.04.2024 | Issue: ITC Denial under Section 73 (Excess ITC + ITC from cancelled dealers)
Relevant Provisions: Sections 16, 73, 75(4), 75(3) CGST/SGST Acts

FACTS OF THE CASE (Paras 1–7)

The dispute emanated from a Show Cause Notice dated 23.09.2023 issued under Section 73, proposing a demand of ₹73,76,148 on two grounds: (i) alleged excess ITC, and (ii) ITC availed from cancelled dealers and non-payers. As recorded in para 2, the SCN contained distinct headings and allegations, and the petitioner furnished a detailed written reply on 21.10.2023, addressing each ground and providing factual disclosures.

However, the impugned order dated 29.12.2023 disposed of the SCN by stating that no online reply or personal hearing was availed (para 3), even though the petitioner had filed an online reply and appeared through a representative. The Proper Officer further alleged that bank payment proofs were not produced, and ITC was therefore inadmissible, notwithstanding that no such requirement was stated in the SCN or in the reminder dated 03.12.2023 (paras 5–7).

The petitioner challenged the order as being contrary to Section 75(4) (mandatory opportunity of hearing) and violative of natural justice, particularly because an additional evidentiary requirement was introduced only at the stage of the order.

QUESTIONS FOR DETERMINATION

1. Whether the adjudication order under Section 73 can be sustained when it incorrectly records non-filing of reply and non-appearance, despite the petitioner having filed a detailed reply?

2. Whether the Proper Officer could reject ITC on the ground of non-submission of bank payment proof when neither the SCN nor the reminder required such documentation?

3. Whether failure to stipulate evidentiary requirements and denial of meaningful hearing vitiates the adjudication under Section 75(4)?

COURT’S OBSERVATIONS (Paras 3–7)

The Court noted that the impugned order incorrectly recorded that “RTP has neither filed online reply nor appeared” (para 3), despite material showing that a detailed reply was filed (para 2) and that a representative appeared (para 5). The adjudicating authority, instead of examining the reply, relied on an erroneous factual premise.

Further, at para 7, the Court emphasised that the reminder dated 03.12.2023 — produced in the Court — did not stipulate any requirement of bank payment proofs, yet the order rejected ITC solely on that ground. The Court held that introducing a new requirement at the stage of the final order, without prior notice or opportunity, constituted procedural irregularity and breached audi alteram partem.

The Court accepted the petitioner’s submission (para 5) that, if required, the petitioner could furnish bank payment proofs and clarification on differences in HSN codes.

JUDGMENT / VERDICT (Paras 8–11)

The High Court set aside the adjudication order dated 29.12.2023 and remitted the matter for fresh adjudication. The Proper Officer was directed to:

• Specify in writing all documents and clarifications required (para 8);

• Permit the petitioner to submit bank payment proofs and HSN-related explanations within one week (para 8);

• Grant a personal hearing in compliance with Section 75(4);

• Pass a fresh, reasoned, and speaking order under Section 75(3) within the statutory timeline.

The Court clarified that no finding on merits was recorded and all rights were preserved (para 10).

Outcome: Order quashed for procedural violations; matter remanded for lawful adjudication after full opportunity of hearing.

CLASSIFICATION OF CASE UNDER GST ACT (For Repository Indexing)

Category: Input Tax Credit – Denial of ITC; Procedural Validity of Adjudication; Natural Justice; Section 73 Proceedings
Statutory Focus: Sections 16, 73, 75(3), 75(4) CGST/SGST Acts

TABLE OF CASES REFERRED (WITH SUMMARY & OUTCOME)

(This judgment does not cite external case law. Table included for compliance — marked as “Not Applicable”)

BETWEEN THE FINE LINES (Industry Takeaway)

This decision reinforces that adjudication under Section 73 cannot rely on grounds or evidentiary requirements that were never disclosed in the SCN or hearing notices. Any order that (i) mis-records facts about compliance, (ii) ignores filed replies, or (iii) denies ITC based on unstated requirements is vulnerable to being set aside. Trade must ensure replies are filed through traceable means and insist that officers record acknowledgment and specify all evidence required in writing.

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