GST assessment under Section 74 misinvocation and Section 74A applicability result in remand for fresh consideration

Omission of the erstwhile Sections 73 and 74 and applicability of Section 74A for post 01.04.2024 periods means proceedings initiated under Section 74 lacked jurisdiction; the mixed invocation of Section 74 and Section 74A(5) in the show cause notice and admitted confusion by the authority amounted to non application of mind and prejudiced the respondent's ability to reply, requiring that the assessment order be set aside. Consequentially, the matter is remitted for fresh consideration under Section 74A; the taxpayer must be allowed to file objections within a fixed period and be afforded a clear personal hearing before any merits decision is taken.

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Issues: Whether the assessment proceedings and order dated 19.08.2025 issued under Section 74 of the GST Act (pertaining to financial year 2025-2026) are without jurisdiction in view of omission of Sections 73 & 74 and applicability of Section 74A from 01.04.2024 onwards, and whether the impugned order should be set aside and remitted for fresh consideration under Section 74A.

Analysis: The petition concerns a proceeding and assessment order dated 19.08.2025, arising from a show cause notice dated 04.07.2025, where the respondent invoked Section 74 but also referred to Section 74A(5) later in the notice. The applicable statutory framework is that Sections 73 and 74 were omitted with effect from 01.04.2024 and Section 74A applies for the financial years 2024-2025 onwards. The respondent has admitted that proceedings were wrongly invoked under Section 74. The notice's mixed invocation of Section 74 and Section 74A(5) demonstrates confusion and non-application of mind, causing prejudice to the petitioner in preparing a reply. Given the omission of Sections 73 and 74 and the procedural defects in the notice, the assessment order issued under the wrong provision lacks jurisdiction and requires fresh consideration under the correct statutory provision, with opportunity for the petitioner to file objections and for the respondent to afford a personal hearing before passing orders on merits.

Conclusion: The impugned assessment order dated 19.08.2025 passed under Section 74 is set aside for want of jurisdiction; the matter is remanded for fresh consideration under Section 74A, with directions that the petitioner treat the order as a notice under Section 74A and file reply/objection within four weeks, and the respondent shall thereafter afford a 14-day clear notice for personal hearing and decide the matter on merits in accordance with law.

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