TaxTMI 
TaxTMI 
2023 (6) TMI 1300
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....ns of APGST Act and consequently to set aside the show cause notice dated 06.07.2022 and direct the respondents to release the petitioner's bank account. 2. Petitioner's case succinctly is thus: (a) Petitioner was trading in groundnut and registered under the rolls of 3rd respondent having GST identification No.37DPKPB1913PIZM. The petitioner was regularly filing return till August, 2019 and thereafter he suffered huge loss and wound up his business in August, 2019 and consequently his GST registration was cancelled w.e.f August, 2019. (b) while so, a show cause notice dated 06.07.2022 in Form GST DRC-01-A under Section 74(1) r/w Rule 142(1)(a) of APGST Act was issued to him by the 3rd respondent alleging that as per the information provided by the Additional Director, DGGI, Visakhapatnam the petitioner has fraudulently claimed Input Tax Credit of Rs.11,84,600 (IGST) for Financial Year 2018-19 which was adjusted in the TRP towards GSTR3B return liability of sum of Rs.10,45,400/- for the period August, 2018 to August, 2019, however it came to light that the petitioner passed the fraudulent ITC invoices to the purchasers. Thus the petitioner was called for either to submit expla....
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....sh explanation. On receiving explanation the proper officer shall pass order either accepting or rejecting the return filed by the assessee. If satisfactory explanation is not provided by the assessee, proceedings under Section 73 or 74 of the APGST Act can be initiated. In the instant case even without calling for any explanation from the petitioner in terms of Section 61 of the APGST Act, respondent No.3 issued show cause notice u/s 74 of the APGST Act which is contrary to the scheme of the Act. Therefore the show cause notice is vitiated by law. Added to it, 3rd respondent has not furnished material relied upon by the department for disallowing the ITC. Hence the writ petition, challenging the show cause notice u/s 74 of the Act and consequential attachment of the bank account of the petitioner. 3. Respondent No.3 filed counter opposing the writ petition inter alia contending thus: (a) It is firstly contended that writ petition is not maintainable inasmuch as, the petitioner has efficacious alternative remedy of filing appeal. Nextly it is contended that the petitioner filed return from May, 2018 to February, 2019 and NIL return from March, 2019 to August, 2019. Meanwhile ref....
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....etitioner Sri B. Abhay Siddanth and learned Government Pleader for Commercial Taxes Sri Y.N. Vivekananda. 5. The main plank of argument of learned counsel for the petitioner is that in terms of Section 61 of APGST Act, the proper officer has to first of all conduct scrutiny of return submitted by the petitioner for the relevant period with reference to records produced by the petitioner and if any discrepancies are found in the return, then the proper officer shall issue notice to the petitioner to explain those discrepancies and in case of failure on the part of the petitioner to give satisfactory explanation or failure to rectify the discrepancy, then only the proper officer can take up the proceedings under Section 74 of the Act. Learned counsel would lament that in the instant case without scrutinizing the return for the Assessment Year 2018-19 u/s 61 and without finding any discrepancies and issuing notice to explain discrepancies and most importantly, without passing any reasoned order thereon, the 3rd respondent has directly issued notice u/s 74 of the Act which is per se illegal and without jurisdiction. (a) Nextly. he would argue that the notice u/s 74 of the Act was se....
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.... other hand, learned Government Pleader would argue, in a given case, basing on the information available, if it appears to the proper officer that the registered person has not paid the due tax or short paid or tax was erroneously refunded or ITC was wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts was made to evade tax, then basing on such information, the proper officer can directly invoke Section 74 and issue show cause notice to the registered person in Form GSTDRC-01 under Rule 142 of APGST Rules, which was precisely done by the 3rd respondent in this case. Learned Government Pleader would thus conclude that scrutiny u/s 61 is not always sine qua non for taking up proceedings u/s 74, rather in exigent circumstances, proper officer can directly invoke Section 74 and also attach the assets of the registered person for protecting the interest of the Government revenue. Learned Government Pleader would further submit that the decision cited by the petitioner has no relevancy. He would further argue that the petitioner has an alternative efficacious remedy of appeal as against the impugned notice and that apart, since the matter is....
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.... the return and related particulars furnished by the registered person to verify the correctness of the return and if he notices any discrepancy, he will seek explanation from the registered person. In case explanation is found acceptable no further action be initiated. However, in case no satisfactory explanation is furnished within the stipulated time or after accepting the discrepancies, if the registered person fails to take corrective measures in his return, the proper officer may initiate appropriate action u/s 65 or Sections 66 or 67 or proceed to determine the tax and other dues u/s 73 or Section 74. Perhaps relying to the above provision, the writ petitioner, it appears, vehemently argued that initiation of scrutiny u/s 61 and follow up procedure thereunder are the sine qua non for taking action u/s 74 of the APGST Act. However, before resolving this controversial issue, some other relevant provisions have also to be perused. (e) Then Section 65 deals with audit of the accounts of a registered person by the tax authorities. We have seen in the Section 61 that on failure of registered person to either answer the notice in the return or correct the discrepancies, one of t....
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....ticularly, when the language employed therein is plain, unambiguous and simple. The apex Court has reiterated the strict rule of interpretation in a slew of decisions. In Union of India v. Deoki Nandal Aggarwal [AIR 1992 SC 96 = MANU/SC/0013/1992] the apex Court observed thus: "14.xxxxx. It is not the duty of the Court either to enlarge the scope of the legislation or the intention of the legislature when the language of the provision is plain and unambiguous. The Court cannot rewrite, recast or reframe the legislation for the very good reason that it has no power to legislate. The power to legislate has not been conferred on the courts. The Court cannot add words to a statute or read words into it which are not there." In Doypack Systems Pvt Ltd. V. Union of India [AIR 1988 SC 782 = MANU/SC/0300/1988] the Apex Court observed thus: "58. The words in the statute must, prima facie, be given its ordinary meaning. Where the grammatical construction is clear and manifest and without doubt, that construction ought to prevail unless there are some strong and obvious reasons to the contrary. Nothing has been shown to warrant that literal construction should not be given effect to. 5....
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....assed. Thereafter on enquiry by the petitioner, he came to know that an order dated 09.05.2022 was passed by the respondent and summary notice in GST DRC 01 and order in GST DRC 07 were uploaded in the GST portal. In GST DRC 01 show cause notice certain defects/ discrepancies were pointed out which are different from the defects/discrepancies mentioned in the Form ASMT -10, dated 22.12.2021 which was earlier issued u/s 61. Challenging the same the writ petition was filed wherein the grievance of the petitioner was that without passing an order on explanation submitted by him to the show cause notice issued in Form ASMT 10 u/s 61, the respondent officer straight away issued show cause notice in GST DRC 01A and passed order in GST DRC -07 u/s 74 by showing different set of discrepancies wich is illegal. Agreeing with his contention learned single Judge of High Court of Madras (Madhurai Bench) observed thus: e) It is thus clear that any proceeding in GST DRC-01A/1 culminating in an Order in GST DRC-07, if pursuant to Scrutiny under Section 61 of the TNGST Act ought to be preceded by issuance of Form ASMT 10. In the present case, though ASMT 10 was issued on 22.12.2021 pointing out c....