2025 (9) TMI 1327 - HC - GST

Writ allowed; assessment, demand, penalty and interest under Sections 73/74 and Rule 142(5) set aside for missing Form DRC-01B

M/s Parvinder Singh Versus The State of Bihar through the Commissioner of State Taxes, The Joint Commissioner Katihar Circle, Katihar and The Additional Commissioner (Appeal) State Taxes, Purnea

HC allowed the writ, set aside the impugned assessment, demand, penalty and interest orders under Sections 73/74 of the CGST/BGST Act and Rule 142(5), ... Levy of tax, penalty and interest u/s 74(9) of the CGST/BGST Act, 2017 read with Rule 142(5) of the Rules - Initiation of assessment and demand under Sections 73 and 74 of the CGST/BGST Act, 2017 - supplies made by the appellant were not disclosed in the month under review - HELD THAT:- Attention of this Court has been drawn towards the statements made in paragraph ‘22’ of the counter affidavit in which these facts have been reiterated. It is, however, admitted in paragraph ‘22’ that had the petitioner intimated the respondent authority through Form DRC-01B that it had filed the return on 07.12.2020, no further proceeding would have been initiated against it under Sections 73 and 74 of the CGST/BGST Act, 2017. This Court finds that this writ application is required to be disposed of by setting aside the impugned orders keeping in view the specific statements made in paragraph ‘22’ of the counter affidavit. The admitted position is that the petitioner had filed the return on 07.12.2020 - In such circumstance as per the averments of the respondent in paragraph ‘22’ of the counter affidavit, the proceeding initiated against the petitioner under Sections 73 and 74 of the CGST/BGST Act, 2017 is only a result of non- communication of the filing of return by the petitioner to the respondent authority. This writ application is allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether initiation of assessment and demand under Sections 73 and 74 of the CGST/BGST Act, 2017 is sustainable where the taxpayer had in fact filed the statutory return and paid tax but failed to intimate the adjudicating authority in the prescribed Form DRC-01B. 2. Whether issuance of show-cause notice uploaded on the GST portal under the heading 'Additional Notices' without separate service by e-mail/SMS constitutes a bar to proceedings, or whether the authority's reliance on portal data and non-communication by the taxpayer justifies assessment under Section 74 read with Rule 142(5). 3. Whether proceedings under Section 74 (fraud/intentional evasion) were warranted in view of the facts that the return was ultimately filed and the State admitted that communication of that fact in Form DRC-01B would have precluded initiation under Sections 73 and 74. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of assessment under Sections 73/74 where return filed but DRC-01B not submitted Legal framework: Sections 73 and 74 of the CGST/BGST Act, 2017 govern demand and recovery where tax is not paid-Section 73 for non-intentional cases and Section 74 for cases involving suppression or intent to evade; Rule 142(5) and related BGST Rules set out notice and assessment procedures; Form DRC-01/D RC-01A/DRC-01B are prescribed communications on the portal for intimation and response. Precedent Treatment: No judicial precedent was cited or applied by the Court in the judgment. Interpretation and reasoning: The Court accepted the factual admission in the respondent's counter-affidavit (paragraph 22) that the petitioner had in fact filed the GSTR-3B return and paid tax on 07.12.2020. The respondent further admitted that, had the petitioner intimated the adjudicating authority of such filing through Form DRC-01B, no further proceedings under Sections 73 and 74 would have been initiated. The Court reasoned that initiation of proceedings ultimately flowed from the absence of communication to the adjudicating authority rather than any substantive concealment of turnover or tax liability. Ratio vs. Obiter: Ratio - Where tax and return are filed and the authority admits that notification in the prescribed form would have obviated assessment under Sections 73/74, proceedings based solely on non-communication are liable to be set aside. Obiter - Observations on administrative practices of portal use and filing timelines are ancillary. Conclusion: The impugned assessment and demand under Sections 73/74 were set aside because the return had been filed and the respondent conceded that failure to file Form DRC-01B (communication) - not substantive concealment - caused the proceedings. Issue 2 - Adequacy of notice served via portal 'Additional Notices' without separate e-mail/SMS service Legal framework: Rule 61(5) of the BGST Rules, 2017 (referenced in relation to GSTR-3B) and provisions prescribing issuance and service of notices through the GST common portal and prescribed forms (DRC series). Precedent Treatment: No authority was invoked to govern adequacy of portal-alone service; Court decided on admitted facts rather than a general legal pronouncement on service modalities. Interpretation and reasoning: The petitioner contended that the show-cause notice was uploaded under 'Additional Notices' and not separately served by e-mail/SMS, resulting in lack of effective notice and no response. The State's case acknowledged that had the petitioner used the prescribed Form DRC-01B to intimate filing, the proceedings would not have continued. The Court focused on the operative consequence (non-communication) rather than resolving an abstract challenge to portal-only notices; accordingly, the factual admission made the issue of separate service non-determinative. Ratio vs. Obiter: Obiter - The Court's observations regarding non-service by alternate modes and the practical availability of information on the common portal are incidental to the decision. Ratio - Where the authority proceeds despite administrative records showing filing, and the taxpayer's failure was limited to not using the prescribed intimation form, setting aside is appropriate on those facts. Conclusion: The Court did not rest the decision solely on insufficiency of notice-service modes; it set aside the proceedings because the return had been filed and lack of prescribed intimation was the proximate cause of the action, as admitted by the respondent. Issue 3 - Appropriateness of invoking Section 74(9) (fraud/intentional evasion) where taxpayer filed return and paid tax subsequently Legal framework: Section 74(9) empowers imposition of tax, interest and penalty where suppression or intent to evade is established; assessment under Section 73 applies where no such intent is found. Rule 142(5) provides procedural aspects for such assessments. Precedent Treatment: No precedent was cited; the Court relied on admissions in the record. Interpretation and reasoning: The adjudicating authority treated the omission as deliberate suppression and issued a DRC-01 show-cause notice under Section 74. The State's pleadings, however, conceded that the proceedings were a consequence of non-communication to the authority and that filing the return and informing through DRC-01B would have prevented initiation under Sections 73/74. Given this concession and the fact of subsequent filing and payment, the Court found that invoking Section 74 (fraud/intentional evasion) could not be sustained on the record. Ratio vs. Obiter: Ratio - Invocation of Section 74 is inappropriate where the material fact is later-filed return and tax payment and the authority admits that prescribed communication would have averted proceedings; in such circumstances, assessments under Section 74 must be set aside. Obiter - The factual template for distinguishing deliberate concealment from administrative non-communication is noted but not exhaustively elaborated. Conclusion: The Court set aside the orders imposing tax, penalty and interest under Section 74(9) read with Rule 142(5) since the initiation was attributable to the absence of prescribed intimation rather than proven suppression or intent to evade. Relief and Final Determination Legal framework: Writ jurisdiction to quash orders where proceedings are vitiated by admitted facts and where the authority's own pleadings negate the basis for assessment. Interpretation and reasoning: On the admitted facts in the counter-affidavit and documentary proof of return filing and tax payment (Annexure P/4), the Court concluded that continuation of proceedings was unjustified. The Court therefore set aside the impugned assessment orders and demand (DRC-07). Ratio vs. Obiter: Ratio - Where the taxing authority admits that prescribed communication would have obviated proceedings, and the taxpayer demonstrably filed the return and paid tax, the Court will set aside assessments and demands predicated on the absence of such communication. Obiter - No broader pronouncement on notice-service standards or on the consequences of portal-only notices was established. Conclusion: The impugned orders and demand were set aside and the writ petition allowed on the ground that the return had been filed and the respondent's admitted position rendered the proceedings unsustainable.