Non issuance of SCN mandated under Section 74.

[Deepak]

In my Jurisdiction (Tier 3 district in Tamil Nadu), there is a problem with State GST officers. They are issuing DRC 01 under section and refuse to issue SCN as mandated by Section 74. Most of the tax practitioner and even some CAs are not aware of this fact and participated in proceeding. Let's say, 10 clients received DRC 01 under rule 142 and none of this client received SCN under 74 and most of the issues were mismatch between GSTR 2A and GSTR 3B. When i asked the department officers via phone for SCN, they are saying DRC 01 is more than sufficient and it is not mandatory to issue SCN just because the act says.

Now, this is specific to my own case. Classic, GSTR 2A vs GSTR 3B. DRC 01A and DRC 01 issued u/s 74 and fails to issue detailed allegation as mandated to the client. The client did not reply or did not personal hearing and hence order passed. He came to me for appeal and i filed on following grounds:

1. Non issuance of SCN

2. Not proving fraud or other ingredients of Section 74 and many such. Filed appeal and appeal accepted. Now my questions for this specific case and general is:

1. Do i have to submit reconciliation table explaining the difference between GSTR 2A and GSTR 3B before appeal stating the differences and whether defense council will accept this.

2. What if department uses Section 160 and says, the client must have communicated before.

3. On what basis the order will be quashed by FAA accepting my grounds or confirm the order invoking section 160.

4. What other measures should I follow for personal hearing of appeal.

5. Some orders are passed by State Tax Officer u/s 74. How to check jurisdiction of the same in state level. Whether circular 03/03/2017 will be of any use for state jurisdiction.

PS: This is my first meeting between myself and client. He just came to me for filing appeal.

AI Summary

Section 74 notice requirements: DRC-01 cannot replace a proper show cause notice for fraud-based GST demands.
Invocation of Section 74 on a GSTR-2A and GSTR-3B mismatch requires a proper show cause notice with detailed allegations of fraud, wilful misstatement or suppression; a DRC-01 summary under Rule 142 is not treated as a substitute where it does not contain the statutory basis of demand. On appeal, the suggested approach is to challenge the validity of the proceedings for want of SCN and natural justice, while also filing reconciliation, invoices and supporting records on merits. Section 160 is described as curing only minor defects, not the absence of a mandatory notice or the ingredients of Section 74.