GST Adjudicating Authority Not Bound To Seek Additional Documents Before Passing Order: Delhi High Court

The Delhi High Court has held that an adjudicating authority under the Central Goods and Services Tax Act, 2017 is not obliged to call for additional documents or clarifications from a business merely because it finds the material placed on record to be insufficient to determine tax liability.

A Division Bench of Justices Anil Kshetarpal and Shail Jain dismissed a writ petition filed by Sodexo India, challenging a GST demand of around ₹8.75 crore.

The Court rejected Sodexo's contention that the adjudicating authority ought to have sought further documents before passing the impugned order under Section 74 of the GST Act.

It observed, “The submission advanced on behalf of the Petitioner, in essence, proceeds on the premise that it was incumbent upon the adjudicating authority to seek further documents before concluding the proceedings. Such a proposition, in the opinion of this Court, cannot be accepted as an inflexible requirement of natural justice.”

The adjudicating authority had confirmed the demand against Sodexo on eleven issues identified during audit proceedings. The principal component of the demand related to the allegation that the supply of catering services and sale of pre-packaged food products constituted a composite supply attracting GST at the rate of 18%.

Sodexo argued that although it had submitted replies and supporting documents during the audit and adjudication proceedings, the adjudicating authority should have sought additional clarifications if it found the material inadequate.

The company further contended that its submissions had not been properly considered, resulting in a violation of the principles of natural justice.

Rejecting the plea, the Court noted that Sodexo had actively participated in the proceedings by responding to the audit memo, the additional audit memo and the show-cause notice.

It had also placed agreements, invoices, reconciliations and other documentary material on record and participated in personal hearings.

“It is, therefore, not a case where the Petitioner was denied an opportunity to place its case or produce material in support thereof,” the Court observed.

It added, “Whether the material produced was sufficient to substantiate the Petitioner's case, whether any further documents ought to have been furnished, and whether the conclusions ultimately drawn by the adjudicating authority are sustainable, are all matters touching upon the merits of the adjudication,” the Court said.

The court emphasized that such issues fall squarely within the jurisdiction of the appellate authority under Section 107 of the CGST Act.

As such, the court refused to exercise its writ jurisdiction but granted liberty to the company to avail its statutory remedy.

For Petitioner: Senior Advocate Kavita Jha with Advocates Sandeep Gupta, Arun Jain, Anant Mann, Aditi Sabharwal, Surabhi Prabhu Desai and Kanika Sethi.

For Respondents: Senior Standing Counsel Arjun Malik (CBIC) with Advocate Mayuri Makhija; Senior Panel Counsel Vedansh Anand with Government Pleader Shubham Goyal and Advocate Kush Garg.