Separate SCNs under Sections 73 and 74 valid for different grounds; vague notice challenge rejected, fresh demand notice directed

The HC held that issuance of separate SCNs under Sections 73 and 74 of the WBGST/CGST Act for the same period is valid, as the grounds differ-Section 73 addresses non-fraudulent tax discrepancies, while Section 74 concerns fraud or willful suppression. The challenge to the SCN's vagueness was rejected since the notice referenced relevant GSTR-1 tables and complied with procedural rules, and the petitioner failed to adequately contest it. The Court declined to entertain the petitioner's claim based on the non-constitution of the appellate tribunal, emphasizing that the demand in Form GST APL04 dated 27th December 2023 is final. Consequently, demands in the show-cause notice dated 13th May 2024 were quashed, and the demand in DRC 07 dated 19th July 2024 was set aside. The matter was remanded with directions to issue a fresh demand notice consistent with the Court's findings.

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ISSUES:

Whether a show cause notice under Section 73 of the WBGST/CGST Act, 2017 can be issued for the same tax period after issuance of a notice and order under Section 74 for that period.Whether the show cause notice under Section 73 is vague and lacking in particulars, especially concerning demand under the reverse charge mechanism (RCM).Whether input tax credit (ITC) availed on inward B2B supplies (including debit notes and amendments) already adjudicated under Section 74 can be included again in a subsequent show cause notice under Section 73.Whether non-disclosure of particulars by the taxpayer permits the proper officer to impose demand without scrutinizing records, particularly when the issue has been adjudicated previously.Whether the petitioner can challenge the demand confirmed by an appellate order when the appellate tribunal is yet to be constituted.

RULINGS / HOLDINGS:

The Court held that the issuance of separate show cause notices under Section 73 and Section 74 for the same period is permissible because the scope of these sections is "entirely different," with Section 74 addressing fraud or wilful misstatement and Section 73 addressing other reasons for tax short payment or erroneous refund.The show cause notice under Section 73 was not vague as it referred to particulars in Form GSTR-1, including details of outward supplies and HSN codes, and complied with Rule 142 of the WBGST/CGST Rules, 2017.The inclusion of ITC availed on inward B2B supplies in the Section 73 notice, which had already been adjudicated under Section 74, was impermissible; "such issue could not have been included in the subsequent notice" and the related demand was quashed.Non-disclosure of supporting documents by the petitioner does not relieve the proper officer of the obligation to scrutinize records nor justify imposing demand when the matter has already been adjudicated.The petitioner cannot avoid challenging the appellate order on the ground of non-constitution of the appellate tribunal; having "chosen to bypass the appellate remedy" and invoked writ jurisdiction, the petitioner cannot reserve the right to question the order later.

RATIONALE:

The Court applied the statutory framework of Sections 73 and 74 of the WBGST/CGST Act, 2017, which distinguish between tax determination for reasons other than fraud (Section 73) and for reasons involving fraud or wilful misstatement (Section 74), with differing procedural safeguards and time limits.The Court relied on the explicit language of the Act and the Explanation clauses clarifying that proceedings under Sections 73 and 74 are distinct and may coexist for the same tax period if based on different grounds.Compliance with procedural requirements under Rule 142 and reference to GSTR-1 tables addressed the vagueness challenge, reinforcing the adequacy of particulars in the notice.The Court emphasized the principle that once an issue has been adjudicated and an appellate order confirmed, it attains finality unless challenged by appropriate statutory remedy, rejecting attempts to relitigate the same issue via writ jurisdiction.No dissent or doctrinal shift was indicated; the judgment reaffirmed established statutory interpretations and procedural norms under the GST framework.

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