2026 (2) TMI 656 - HC - GST

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 ... Omission of Sections 73 and 74 with effect from 01.04.2024 - Applicability of Section 74A from financial years 2024-2025 onwards - Jurisdictional validity of show cause notice and assessment - Remand for fresh consideration under the correct statutory provision - HELD THAT:- As rightly contended by the petitioner, the provisions of Sections 73 & 74 of the GST Act stood omitted with effect from 01.04.2024 and only the provisions of Section 74A of the GST Act will apply from the financial years 2024-2025 onwards. Hence, it is clear that the show cause notice dated 04.07.2025 and assessment order dated 19.08.2025 came to be passed without any jurisdiction. Upon perusal of the show cause notice dated 04.07.2025, it appears that though the respondent had assumed jurisdiction under Section 74, in the later portion of the said notice, he had highlighted the provisions of Section 74A(5) of the GST Act. In such case, it is clear that the respondent had issued the said show cause notice in total non-application of mind, which leads to unnecessary confusion and hardship to the petitioner in filing their reply. In such view of the matter, this Court is inclined to set aside the impugned order dated 19.08.2025 passed by the respondent. To avoid any further delay and inconvenience to both the parties, this Court is inclined to direct the petitioner to treat the impugned assessment order as a notice issued under Section 74A of the GST Act and file reply to the same. Impugned assessment order dated 19.08.2025 set aside as passed without jurisdiction; matter remitted for fresh adjudication under Section 74A of the GST Act with directions. 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.