Failure to issue ASMT-10 notice in GST scrutiny u/ss73/74 undermines assessments; orders set aside and remanded

Whether failure to issue statutory notice in Form ASMT-10 vitiates adjudication under GST Sections 73/74: HC held the twin preconditions to trigger ASMT-10 (scrutiny under s.61 and noticed discrepancies) existed; non-issuance of ASMT-10 renders any conclusions derived solely from such scrutiny void and not a valid basis for adjudication. Outcome: where adjudication relied on scrutiny findings without proper ASMT-10, those conclusions are vitiated. Application of natural justice where petitioner did not participate: because the petitioner had not replied and asserted unawareness, HC set aside the impugned assessment orders and remanded with liberty to file a reply on condition of remitting 10% of disputed tax within 15 days.

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Issues Involved:
1. Non-issuance of notice in Form GST ASMT-10.
2. Scrutiny of returns under Section 61 of GST enactments.
3. Adjudication under Section 73 of GST enactments.
4. Procedural compliance and its impact on adjudication.
5. Opportunity for the petitioner to contest the tax demand on merits.

Detailed Analysis:

1. Non-issuance of Notice in Form GST ASMT-10:
The petitioner in W.P.No.15307 of 2024 argued that the show cause notice was not communicated through any mode other than being uploaded on the GST portal, leading to their unawareness of the proceedings. The petitioner in W.P.No.15330 of 2024 contended that the non-issuance of Form GST ASMT-10 notice vitiated the adjudication process. The court concluded that the ASMT-10 notice is mandatory if discrepancies are discovered during the scrutiny of returns under Section 61 and Rule 99.

2. Scrutiny of Returns under Section 61 of GST Enactments:
The court examined Section 61, which allows the proper officer to scrutinize returns and inform the registered person of any discrepancies. It was noted that scrutiny is optional and not mandatory, but once discrepancies are found, issuing a notice in Form GST ASMT-10 becomes mandatory. The court emphasized that scrutiny under Section 61 does not constitute reassessment or adjudication but is a preparatory step for potential actions under Sections 65, 66, 67, 73, or 74.

3. Adjudication under Section 73 of GST Enactments:
The adjudications in both writ petitions were under Section 73. The court clarified that adjudication under Sections 73 or 74 can be initiated based on scrutiny, audit, or other credible information. It was concluded that scrutiny under Section 61 is not a mandatory pre-requisite for adjudication under Sections 73 or 74. The court distinguished the present case from Vadivel Pyrotech, where a notice in Form ASMT-10 was issued and replied to before adjudication.

4. Procedural Compliance and its Impact on Adjudication:
The court discussed the procedural requirements under Section 61 and Rule 99, concluding that non-issuance of ASMT-10 notice vitiates the scrutiny process but does not necessarily invalidate subsequent adjudication under Sections 73 or 74. The court emphasized that procedural defects that do not cause prejudice to the taxpayer are saved by Section 160 of applicable GST statutes.

5. Opportunity for the Petitioner to Contest the Tax Demand on Merits:
The court provided the petitioner in W.P.No.15307 of 2024 an opportunity to contest the tax demand by remitting 10% of the disputed tax demand and submitting a reply to the show cause notice. For the petitioner in W.P.No.15330 of 2024, the court remanded the matter for reconsideration, allowing the petitioner to submit an additional reply with supporting documents.

Conclusion:
The court set aside the impugned assessment orders in both writ petitions, providing directions for reconsideration and ensuring that the petitioners are given a reasonable opportunity to contest the tax demands. The court emphasized the importance of procedural compliance while also recognizing the need to balance it with substantive justice.

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