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MUMBAI: The Madhya Pradesh high court has held that Raymond Limited was not afforded a reasonable alternative below Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act) to reply to a present trigger discover.
In this case, the GST authorities had issued Show Cause Notice (SCN) to the taxpayer on 3 September 2022 and inside the following 9 days raised a demand order.The firm challenged the SCN as effectively as the order earlier than the high court. The firm contended that a reasonable alternative of being heard was denied to it. Further, the SCN itself was imprecise.
The high court quashed the SCN and the demand order. It famous that the time hole afforded to Raymond Ltd was solely 8 days, which was extraordinarily brief and wouldn’t fulfill the idea of a reasonable alternative to be heard.
An extract of the order, handed by a two-member bench reads: “Though no time period is stipulated in Section 73 for the notice to respond, it is obvious that the statute contemplates affording reasonable opportunity to reply to show cause notice… In the considered opinion of this Court, the concept of reasonable opportunity demands that a reasonable period of time to reply to the notice should be not less than 15 days, if not more… However, since the time period provided for paying tax, interest and penalty specified in the show cause notice is statutorily prescribed to be thirty days in Section 73 (8), the reasonable period within which show cause notice is to be responded to, ought to be treated as thirty days”.
The high court additionally famous that the impugned present trigger discover was imprecise and missing in materials particulars, which might not allow the taxpayer to successfully reply to it.
Accordingly, the high court put aside the SCN and the impugned demand order with liberty to the GST authorities to subject a contemporary legitimate SCN. According to Bipin Sapra, oblique tax accomplice at EY-India, “ This high court order is likely to benefit taxpayers where adverse demand orders are passed by therevenue authorities without providing a reasonable time to respond to the SCN.”
“The judgement re-emphasizes the principle that notices are not sustainable if they are bereft of facts and material and thus, become vulnerable to judicial review,” he added.
In this case, the GST authorities had issued Show Cause Notice (SCN) to the taxpayer on 3 September 2022 and inside the following 9 days raised a demand order.The firm challenged the SCN as effectively as the order earlier than the high court. The firm contended that a reasonable alternative of being heard was denied to it. Further, the SCN itself was imprecise.
The high court quashed the SCN and the demand order. It famous that the time hole afforded to Raymond Ltd was solely 8 days, which was extraordinarily brief and wouldn’t fulfill the idea of a reasonable alternative to be heard.
An extract of the order, handed by a two-member bench reads: “Though no time period is stipulated in Section 73 for the notice to respond, it is obvious that the statute contemplates affording reasonable opportunity to reply to show cause notice… In the considered opinion of this Court, the concept of reasonable opportunity demands that a reasonable period of time to reply to the notice should be not less than 15 days, if not more… However, since the time period provided for paying tax, interest and penalty specified in the show cause notice is statutorily prescribed to be thirty days in Section 73 (8), the reasonable period within which show cause notice is to be responded to, ought to be treated as thirty days”.
The high court additionally famous that the impugned present trigger discover was imprecise and missing in materials particulars, which might not allow the taxpayer to successfully reply to it.
Accordingly, the high court put aside the SCN and the impugned demand order with liberty to the GST authorities to subject a contemporary legitimate SCN. According to Bipin Sapra, oblique tax accomplice at EY-India, “ This high court order is likely to benefit taxpayers where adverse demand orders are passed by therevenue authorities without providing a reasonable time to respond to the SCN.”
“The judgement re-emphasizes the principle that notices are not sustainable if they are bereft of facts and material and thus, become vulnerable to judicial review,” he added.
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