Tax Authority's GST Assessment Order Invalidated for Failing to Follow Proper Notice Sequence Under Section 74

The HC set aside a TNGST order due to procedural irregularities in issuing notices under Section 74 of the TNGST Act. The respondent had issued a notice in Form GST ASMT-10 for AY 2019-2020 but failed to follow the proper sequence required by Section 74(5) before proceeding to Section 74(1). The Court remanded the matter for reconsideration, directing authorities to strictly adhere to statutory procedures, provide the petitioner with a personal hearing opportunity, and pass orders based on merits and in accordance with law.

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Issues:
1. Failure to follow the proper procedure under Section 74 of the Tamilnadu Goods and Services Tax Act in issuing notice and passing orders.

Analysis:
The petitioner, a dealer under the TNGST regime, challenged the proceedings of the 1st respondent regarding the adjustment of a credit amount. The issue arose from a notice issued in Form GST ASMT-10 for the Assessment Year 2019-2020, which should have been issued under Section 74(5) of the Act. Despite the petitioner's response to the notice, an order was passed under Section 73(1) of the Act without following the prescribed procedure under Section 74.

The Court noted that the procedure under Section 74 requires the issuance of the first notice or option to the dealer under Section 74(5) of the Act. Only if the dealer does not utilize or respond to the option, a further notice under Section 74(1) should be issued. In this case, the initial notice incorrectly mentioned Form GST ASMT-10 and was followed by an order under Section 74(1) without complying with the requirements of Section 74(5). As a result, the Court set aside the order and remanded the matter back to the respondents for proper reconsideration.

After hearing arguments from both parties, the Court emphasized the importance of strictly following the procedures outlined in Section 74(5) and 74(1) during reconsideration. The Court directed the respondents to provide the petitioner with an opportunity for personal hearing and to pass orders on the matter based on merits and in accordance with the law. The Writ Petition was disposed of with these observations and directions, with no costs imposed, and the connected Miscellaneous Petition was closed.

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