2025 (12) TMI 634 - HC - GST

Pre-amendment GST assessments under Sections 61 and 73 invalid without mandatory Rule 142(1)(a) notice, matters remanded

HC held that, where scrutiny under S.61 of the GST Act leads to assessment proceedings under Ss.73/74, issuance of a prior notice under Rule 142(1)(a) of ... Principles of natural justice - preliminary Notice u/r 142 1A) of the G.S.T. Act, had not been served on the petitioner, prior to the issuance of Notice under Section 61 - HELD THAT:- A perusal of Section 61 of the G.S.T. Act, would show that, where a Notice is issued u/s 61, and the proper officer is not satisfied with the explanation, offered by the dealer, further proceedings are to be initiated under Sections 65, 66, 67, 73 & 74 or 74 A. In view of the fact that, the proceedings initiated under Section 61, would have to result in proceedings either under Section 73 or under Section 74, it would only be appropriate that, a Notice is issued under Rule 142 1 (A), after scrutiny under Section 61 is completed, and if the proper officer is not satisfied with the explanation given by the dealer, to the deficiencies pointed out by the proper officer - In the present cases, it appears that the proper officer, after issuing a Notice under Section 61 had proceeded to pass orders of assessment under Section 73, without issuing the Notice under Rule 142 1(A) of the C.G.S.T. Rules. Since such a course of action is not permissible, it would be appropriate to dispose of these Writ Petitions, by setting aside the orders of assessment, challenged in these Writ Petitions, and remanding the matters back to the proper officer to take appropriate action, after issuance of a Notice under Rule 142 1 (A) of the G.S.T. Rules. However, it would also be necessary to notice that the principle laid down in this Order would be applicable only to such assessments as are covered for the period prior to the amendment of Rule 142 1(A), on 15.10.2020. Petition allowed by way of remand. The petitions challenged assessment orders passed under Section 73 of the GST Act following scrutiny notices issued under Section 61, on the ground that no prior notice under Rule 142(1A) of the CGST Rules was served. Section 61 permits issuance of a notice where, upon scrutiny of returns, the proper officer is not satisfied as to their correctness. If the explanation is unsatisfactory, 'further proceedings are to be initiated under Sections 65, 66, 67, 73 & 74 or 74A.' Rule 142(1A), however, requires that a notice under this Rule be issued 'prior to any proceeding being taken either under Section 73(1), 74(1) or 74A(1).' The Court held that as proceedings under Section 61 culminate in proceedings under Section 73 or 74, 'it would only be appropriate that, a Notice is issued under Rule 142 1(A), after scrutiny under Section 61 is completed' and before assessment. Since assessments had been made under Section 73 without issuing Rule 142(1A) notice, they were set aside and matters remanded, limited to periods prior to the amendment of Rule 142(1A) on 15.10.2020.