GST Update

 Desk of CA. Praveen Sharma – 1000 Series (CAPS) 

PUNJAB AND HARYANA HIGH COURT IN THE CASE OF Bagga Vet Pharma

The High Court set aside a GST demand order after finding that it was passed without proper application of mind and without considering the detailed replies submitted by the taxpayer.

The case involved a taxpayer engaged in trading of veterinary and poultry feed supplements, where the department alleged improper reversal of input tax credit relating to exempt supplies. 

The taxpayer had consistently responded to notices and submitted detailed reconciliations along with supporting documents to justify that ITC was availed only for taxable supplies.

Despite this, the department issued a show cause notice and later confirmed the demand, stating that the matter was “sub-judice” and the reply was unsatisfactory. 

However, the Court noted that no proper reasoning was given in the order and there was no clarity on how the conclusions were reached. Even the department admitted that the issue was not actually sub-judice.

The Court observed that the adjudicating authority failed to examine the replies, ignored reconciliation statements, and passed a non-speaking and unreasoned order. 

Such an approach was held to be a clear case of non-application of mind and violation of principles of natural justice.

Accordingly, the impugned order was quashed, and the matter was remanded back to the department with directions to reconsider the case after properly examining all submissions and granting a fresh opportunity of hearing to the taxpayer.

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