2023 (11) TMI 956 - HC - GST

Proceedings u/s 74 of WB GST Act valid without prior Section 61 scrutiny, writ challenge dismissed

HC upheld the validity of proceedings and demand initiated u/s 74 of the WB GST Act arising from mismatch between GSTR-7 and GSTR-3B. It held that ... Validity of order passed u/s 74 and GST demand - Intimation of tax liability read with a show cause notice issued u/s 74 of the WB GST Act, 2017 - Requirement of scrutiny of GST returns u/s 61 first - mismatch between GSTR-7 and GSTR-3B - HELD THAT:- On a reading of the section 74, it is ex facie evident that verification under section 61 of the Act is neither a pre-condition nor a sine qua non for initiation of proceedings under section 74 of the Act. The opening words “where it appears to the proper officer” clarifies that it is the appropriate officer who has to form a prima facie opinion prior to initiation of proceedings. In this case, from the records itself it appears that there is an apparent mismatch between FORM GSTR-7 and FORM GSTR-3B filed by the petitioner - The practice of entertaining writ petitions challenging legality of show cause notices inevitably result in stalling enquiries and retarding the investigative process meant to find the real facts with the participation and presence of the parties is to be deprecated. An assessee cannot choose to ignore all notices and steps taken by the respondent authorities who are bound to act in a time bound manner under the Act and thereafter take the plea of natural justice. The unreported decision cited in Prabhu Dayal Jajoo vs. The Deputy Commissioner, State Tax, Budge Budge Charge and Ors. [2023 (6) TMI 830 - CALCUTTA HIGH COURT] is inapposite. In this case, the show cause notice had been uploaded on a different portal and this fact was unknown to the petitioner. However, in the facts of this case the impugned notices had been uploaded in the same portal under the link Additional Notices and Orders which the petitioner was deemed to have knowledge of. There is no illegality nor perversity nor infraction of law nor procedural impropriety which warrants any interference with any of the impugned orders and steps taken pursuant thereto - Application dismissed. Issues involved:The grievance against tax liability, show cause notice under section 74 of the Act, final order passed under section 74, and consequential notice of bank attachment.Issue 1: Pre-show cause notice and violation of rulesThe petitioner received a pre-show cause notice in FORM GST DRC-01A for the period 2018-19, alleged to be unsigned and issued without verification of returns under section 61 of the Act. An unsigned show cause notice was also issued under section 73 of the Act, along with a summary notice in FORM GST DRC-01.Issue 2: Lack of verification and violation of natural justiceThe petitioner's primary grievance is the failure of authorities to verify returns under section 61 of the Act before issuing the intimation of tax in FORM GST DRC-01. Allegations of invalidity due to the unsigned nature of the communication, violation of Rule 26(3) of the WBGST Rules, and lack of opportunity for a personal hearing are raised.Issue 3: Interpretation of Section 74 of the ActSection 74 of the Act outlines the procedure for serving notice on a person chargeable with tax. The court clarifies that verification under section 61 is not a pre-condition for initiating proceedings under section 74, emphasizing the role of the proper officer in forming a prima facie opinion. The petitioner's claim of notices being uploaded incorrectly on the portal is dismissed, as the notices were accessible and intimation was also sent via email.Issue 4: Authentication of notices and representationThe contention that notices were neither signed nor authenticated is refuted, as notices uploaded on the GST Portal are authenticated through digital signatures. Section 74(9) provides for the opportunity to submit a representation. The petitioner's failure to engage with the authorities and contest the proceedings is highlighted.Issue 5: Judicial precedents and lack of grounds for interferenceThe court distinguishes cited decisions where no opportunity of hearing was afforded to the petitioner. It concludes that there is no illegality or procedural impropriety warranting interference with the impugned orders.In conclusion, the writ petition is dismissed, emphasizing the importance of engaging with authorities in a time-bound manner and not delaying investigative processes meant to establish facts.