SCN RECEIVED Notice Under Sec 61-FY 2017.18

[Ram Ramachandran]

Hello Sirs,

Please guide me on how to address below sequence of events:

31/01/2020 - GSTR-9C Filed for FY 2017-18

28/09/2022 - We received Notice Under Sec 61 ,pointing out discrepancy of ITC CLaimed - difference between GSTR-2A vs GSTR-3B of Rs 75,508

30/09/2022. - Since the same discrepancy had been pointed out to us by our Auditor when submitting Annual GST Return and filing GSTR-9C for the same year, we agreed to the demand and deposited the tax with interest and filed reply via GST ASMT-11 on 30.09.2022

15/03/2023 - We again received a Fresh Notice from Department via GST Portal under Sec 61, issued by GST Tax Officer,Class II,AVATO, who has not referred to our last reply via GST ASMT-11 or payment of tax and has instead called for voluminous documents - Party Ledgers,Cashbook, Tax Invoices, Purchase Invoices, Purchase/Sales Register Bank Statements for Full Year, Purchase Invoices.

My Question :

a) if I have already agreed to the earlier demand notice and paid the same and filed my reply via ASMT -11 on 30.9.2022, why is the Department now asking for submission of these voluminious documents ?

b) Assuming that they are justified in doing so, though the new SCN does not mention any specific shortfall how does one submit voluminous documents, online ?

Thank you for the guidance from Experts on this forum

[Amit Agrawal]

I am not sure I understood the situation.

If any SCN is issued, same cannot be used for calling for records for scrutiny. Even Section 61 (3) states that " ............ the proper officer may initiate appropriate action including those under section 65 or section 66 or section 67, or proceed to determine the tax and other dues under section 73 or section 74'.

SCNs are issued u/s 73 or 74 or not under Section 61.

Can you please clarify and elaborate about contents of documents so received by you now?

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Ram Ramachandran]

Dear Sir,Thank you for your prompt reply. Maybe, I am using the wrong term "SCN" . Sorry

The 2nd Notice Received on 15/3/2023 states as below. They have not acknowledged/referred to my reply and tax payment vide ASMT-11 on 30.9.2022 :

Notice for intimating discrepancies in the return after Scruting (Issued under Sec 61)

Whereas a scrutiny against your firm under the DGST Act, 2017 for the period 2017-18 is being carried out in terms of Section 61 of DGST Act, 2017 to verify and scrutinize the transactions carried out by your firm for the period under scrutiny. You are hereby directed to produce following documents/ documentary evidence as per Section 35 of the GST Act read with Rule 56 of the GST Rules, failing which, the action under Section 73/74 of the GST Act will be initiated against you without any further intimation/communication:

1. Trading account for the period mentioned above along with the trial balance.

2. Cashbook as on date.

3. Bank statement of the said period.

4. Tax invoice, Bill of supply, delivery note, credit and debit note for the period.

5. Stock register for the period.

6. Purchase invoice for the period.

7. Purchase/sale register for the period.

8. Party Ledgers for the period.

9. Any other documentary evidence.

[Amit Agrawal]

In my view, such notice got no legal validity.

Section 61 (1) reads as follows: The proper officer may scrutinize the return and related particulars furnished by the registered person to verify the correctness of the return and inform him of the discrepancies noticed, if any, in such manner as may be prescribed and seek his explanation thereto.

Section 37 & 38 talks about 'furnishing' defined particulars and Section 39 deals with filing of return.

Hence, concerned officer can NOT issue any valid SCN u/s 73 or 74 merely on the ground of non-furnishing of asked data /documents in given notice.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

However, one needs to keep in mind Dept's other powers like Section 65 to Section 71 (as well as to take into account to your own mindset and legal capacity to deal with adversarial consequences (if any, which cannot be predicted / visualised now)), before deciding to ignore such invalid notice.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

As far as I am concerned, personally, I would simply ignore such invalid notice all-together. I will not even bother to submit any reply explaining how / why said notice is invalid, but wait for officer's action (if any) against non-submission of any reply and react - as permitted under law - if & when he chooses to act.

But, that's me.

Everyone needs to take his own call considering various facets (as explained in earlier posts of mine)

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Ram Ramachandran]

Thank you for your prompt responses. Your perspective on this matter does help in deciding future course of action.

[Padmanathan KV]

Sir,

After going through the above thread, I am sharing practical approach in my opinion. Nevertheless I fully concur with the views of Ld. Amit Ji.

1. The first Notice for scrutiny was issued in ASMT-10 and you have made payment and replied in ASMT-11. The officer has to issue ASMT-12 dropping the proceedings. Kindly obtain a copy of the ASMT-12 from the officer.

2. Regarding the second ASMT-10 notice, the officer cannot ask for books of accounts and other documents in scrutiny of returns proceedings. However, it is open for him to issue summons, conduct inspection, audit etc. However, some of these proceedings require sanctions from high authorities.

Politely write to the officer saying that ASMT-10 was issued earlier and payment has been done along with copy of previous notice, reply, challan etc. and ASMT-12 if you can collect (assuming it was issued by different officer).

In case, the officer still does not agree to drop the proceedings, kindly ignore the said invalid notice.

[Amit Agrawal]

Kindly note that my views - shared earlier - are irrespective of the fact that earlier notice u/s 61 was issued by Dept. and complied by assessee.

But, I also like Shri Padmanathan Kollengode Ji's practical approach after taking into account your peculiar facts:

A. While reply to said notice online stating the scrutiny of returns u/s 61 (for given period) is already done by the Dept. in the past and you got notice in Form ASMT-10 there-against (giving details for identification of such notice, as generated from GST portal).

B. In the reply, you should also state that you have already paid asked amount and filed your reply vide Form ASMT-11 (giving details for identification of such reply so submitted & Challan, as generated from GST portal) .

C. In support, you should also attach both the copy of notice so received in the past and reply submitted there-against along-with copy of challan.

D. In view of the above, in your reply itself, you should request the officer to drop fresh notice under very same Section 61 but issue you Form ASMT-12 against your earlier reply.

By this way, you need not submit any of documents / recorded listed in the fresh notice so received, you need not visit or meet the officer and you need not even argue about validity or otherwise of the fresh notice now issued and you will be submitting 'reply' to fresh notice on record (while putting entire burden on Dept. officer to pass pending order in old case, while giving him nothing to act upon u/s 61 read with Section 73 & 74 against fresh notice).

As explained by me in earlier posts, everyone needs to take his own call considering various facets

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Ram Ramachandran]

Hello Sirs, Kind Attention : Mr Padmanathan Kollengode and Mr Amit Agarwal -Refer your suggestions in reply to my query of March 2023.

14-04-2023: I had replied to the Department referring to my payment of Demand already done in 2022 and also requested a reply from the Department in FORM ASMT-12 as suggested on this forum.

20.09.2023:Today I have received a SUMMARY of SCN vide FORM GST DRC -01[See Rule 100(2) & 142 (1)(a)]. This has been issued as per Sec 73 of DGST Act.

Grounds of SCN : Non Compliance under Sec 61 of DGST Act 2017

Tex & Other Dues: The Department has listed out the same excess ITC Claimed in FY 2017-18 as per earlier notices, which has already been accepted and paid by me in Sept 2022 with Interest ( No penalty). However, this time they have also added penalty in their Demand alongwith earlier amounts.

No reference has been made to ASMT 12 in response to my earlier replies /submissions vide ASMT-11

They have given me a 1) Personal Hearing on 4th Oct 2023 and Reply to be provided by 20th Oct 2023.

What is the suggested course of action ?

[Padmanathan KV]

Sir,

You have to file a reply to the SCN u/s 73 pointing out that you have already paid the demand and enclose a copy of the paymeny details such as challan.

Please ensure you have paid interest under section 50(3) from the date of utilizing the wrong credit till date of its payment. (interest rate is 18%)

no penalty cam be imposed if the tax and interest is paid within 30 days of notice. In your case, tax is already paid. hence only ensure, interest if any is also paid.

Kindly attend personal hearing and submit the above points and details of payments.

[Amit Agrawal]

Here, it is worth noting that the querist has avoided complete & elaborate audit of his records in grab of scrutiny u/s 61 by the Dept. officer, which was his primary concern while raising subject query.

And his trouble got limited to issue which he had already taken off much before issuance of SCN. And SCN so issued is easily defendable under law as explained by Shri Padmanathan Ji in earlier post.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

AI Summary

Taxpayer Challenges GST Discrepancies and Penalties; Experts Question Validity of Notices Under Section 61 and Section 73 Compliance. A taxpayer sought advice on addressing a sequence of events involving Goods and Services Tax (GST) discrepancies for the financial year 2017-18. After filing GSTR-9C and receiving a notice under Section 61 for discrepancies in Input Tax Credit (ITC), the taxpayer paid the demanded tax with interest and replied through ASMT-11. Despite this, a new notice requested extensive documentation without acknowledging the previous response. Experts advised that such notices lack legal validity under Section 61, suggesting the taxpayer file a reply referencing past compliance and request ASMT-12. Later, a summary of SCN under Section 73 was issued, demanding penalties. The taxpayer was advised to present evidence of previous payments and ensure compliance with interest payments during a scheduled hearing.