Prior notice under Rule 142(1A) is required before CGST demand proceedings follow scrutiny under Section 61.

In scrutiny proceedings under Section 61 of the CGST Act, a prior notice under Rule 142(1A) is required before moving to demand proceedings under Section 73 when the dealer's explanation is not accepted. The Court held that scrutiny must first be completed and, before assessment action is taken under the demand provisions, the Rule 142(1A) notice must be issued. Assessments made without that notice were therefore unsustainable. The ruling was confined to assessment periods before the 15.10.2020 amendment to Rule 142(1A), and the defective orders were set aside with remand for fresh action after issuing the required notice.

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Issues: Whether, in proceedings initiated under Section 61 of the Central Goods and Services Tax Act, 2017, a notice under Rule 142(1A) of the Central Goods and Services Tax Rules, 2017 is required before proceeding to assessment under Section 73 of the Central Goods and Services Tax Act, 2017, and whether assessments made without such notice are sustainable.

Analysis: Section 61 provides for scrutiny of returns and contemplates further action where the explanation offered by the dealer is not accepted. Rule 142(1A) operates as a prior procedural notice before proceedings under Section 73(1), Section 74(1) or Section 74A(1) are taken. The Court held that proceedings under Section 61, if not satisfactorily explained, culminate in proceedings under the demand provisions and therefore the notice under Rule 142(1A) should be issued after scrutiny is completed and before assessment action is taken. The Court also confined the ruling to assessments relating to periods prior to the amendment of Rule 142(1A) on 15.10.2020.

Conclusion: The assessment orders passed without issuing notice under Rule 142(1A) were held unsustainable and were set aside, with the matters remanded to the proper officer for fresh action after issuing the required notice.

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