TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 481
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....he petitioner claims to be shocked to have received the show cause issued under Section 74 of the said Act in respect of the tax period 2017-18 to 2018 -19. 5. Mr. Shraff, learned advocate appearing in support of the writ petition would strenuously contend that once a proceeding had been initiated by the respondents and the same had been dropped, no further proceedings could have been initiated by the respondents in respect of the self same period. He has drawn attention of this Court to the notice issued under Section 61 of the said Act, the response filed by the petitioner in Form ASMT 11 and the consequential order issued by the proper officer dropping the proceedings in ASMT 12. 6. In support of his aforesaid contention that the proper officer having not initiated any consequential proceedings by falling back to Section 61(3) of the said Act, no further notice under Section 74 of the said Act could have been initiated, he has placed reliance on a judgment delivered by the Hon'ble High Court of Punjab and Haryana in the case of J.S.B Trading Co. v. State of Punjab, reported in (2024) 169 taxmann.com 9 (Punjab & Haryana). 7. Independent of the above, he would submit that it is....
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.... the said Act was competent to proceed under Section 74 of the said Act. To appropriately consider the provisions, Section 61 and Section 74 are extracted hereinbelow:- "61. Scrutiny of returns.- (1) 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. (2) In case the explanation is found acceptable, the registered person shall be informed accordingly and no further action shall be taken in this regard. (3) In case no satisfactory explanation is furnished within a period of thirty days of being informed by the proper officer or such further period as may be permitted by him or where the registered person after accepting the discrepancies, fails to take the corrective measure in his return for the month in which the discrepancy is accepted, 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." xxxxx xxxxx xxxxx "74. Determinati....
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....s of this Act or the rules made thereunder. (7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable. (8) Where any person chargeable with tax under sub-section (1) pays the said tax along with interest payable under Section 50 and a penalty equivalent to twenty-five per cent. of such tax within thirty days of issue of the notice, all proceedings in respect of the said notice shall be deemed to be concluded. (9) The proper officer shall, after considering the representation, if any, made by the person chargeable with tax, determine the amount of tax, interest and penalty due from such person and issue an order. (10) The proper officer shall issue the order under sub-section (9) within a period of five years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within five years from the date of erroneous refund. (11) Where any person....
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....ficer had concluded that the proceedings must be dropped on the basis of the response filed by the petitioner to a notice under Section 61(1) of the said Act. Section 74, however, stands on entirely different footing. One must keep in mind and as would appear from the above, Section 74 deals with case of fraud, willful misstatement or suppression. The proper officer may not be in a position to identify on the basis of the disclosure made by the registered tax payer as to whether there had been fraud committed by the registered tax payer at the time of scrutiny under Section 61 of the said Act. The same may be detected later. The legislature in its wisdom has thought it fit to incorporate the provision of Section 74 of the said Act. 11. Having regard thereto, considering the peculiar facts as noted in the show cause which, inter alia, includes "Alert Circular", the investigation conducted by the officers which revealed the fraudulent activities committed by the petitioner as noted in the aforesaid show cause, in my view the respondents cannot be faulted for having issued the said notice. The judgment relied on by the petitioner delivered in the case of J.S.B. Trading Co. (supra) do....