Can new issues be raised in SCN when the ADT 02 is raising those?

[Lokesh Chajed]

GST DESK Audit was initiated for FY 2019-20. The relevant documents were submitted and finally ADT-02 was issued by a particular officer (Say 'A'). Post the ADT-02, DRC-01A was also issued by the same officer and accordingly a reply was filed by the Taxpayer.

Now, (due to a transfer of officer) the audit authority has changed in the meanwhile and a new officer 'B' has taken the position. He is raising new issues in the SCN being issued which were neither covered in ADT 02 issued nor in the DRC 01A issued.

Question is: Can there be new issues raised in the SCN when the ADT 02 and DRC 01A ssued already are not covering these matters? Can the SCN transverse beyond the scope of the issues raised in ADT 02 and DRC 01A ?

[KASTURI SETHI]

SCN is always issued after the completion of investigation. Thereafter, no major change can be done in the SCN by the SCN issuing authority. Corrigendum can be issued to the effect of typographical/clerical changes only. For example ; change of address, wrong figures etc. Raising a new point a major change which is not allowed. No new point can be raised in the SCN as well as in the Form GST Audit-2.

 

 

[Amit Agrawal]

While procedure followed may be wrong, generally specking, I do not think that validity of SCN itself can be successfully challenged merely because proper officer has transverse beyond the scope of the issues raised in ADT 02 and DRC 01A.

Moreover, one should also take note of Section 160(1) before sorely relying on challenging validity of such SCN.

Of-course, one needs to know actual nature of transgression and one needs to take entire context and totally of facts into account, before taking any firm view on the issue raised by you.

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

[Lokesh Chajed]

Thanks for your response Kasturi Sethi sir and Amit Agarwal sir. Your inputs are of help to me. I would need to read the provisions intricately again.

[Padmanathan KV]

Up to 15-10-2020, it was mandatory for proper officer to serve DRC-01A where in he "shall" communicate tax, interest and penalty.

If the DRC-01A was issued prior to 15-10-2020, and any new demand is raised in DRC-01, I think you will have a better case of challenging the notice.

Moreover, if the demand is under Section 74, you can also take a contention that you were prevented from effectively exercising your option of paying tax, interest and 15% penalty under 74(5) since the demand in DRC-01 has travelled beyond DRC-01A/ADT02.

[RAVINDRA RASTOGI]

in my opinion, ADT-02 is always a higher jurisdictional assessment order than any other order/notice if SCN under 74 is finally issued also the same rank of the officer can not challenge the ADT-02 with out higher authority permission.

AI Summary

Scope of show cause notice: new substantive issues ordinarily cannot be introduced beyond the audit findings and DRC communications.
New substantive issues generally should not be introduced in a show cause notice when earlier audit communications (ADT 02 and DRC 01A) did not raise those matters; only clerical corrigenda are appropriate. Whether to challenge an SCN that goes beyond prior audit findings depends on the factual matrix, officer jurisdiction, prior mandatory communications, and whether the variation deprives the taxpayer of statutory election or payment options.