TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1593
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....nder the Assam Goods and Service Tax Act, 2017 and having its Goods and Service Tax Identification No.("GSTN") 18AAACP1272G1ZM). The Board of the petitioner's company has resolved by Resolution No.49/2022 dated 10.01.2022 to authorize one Mr. Chitwan Prabhakar as the person authorized to file the writ petition and represent the company in the present proceedings. The petitioner is, inter alia, engaged in the marketing of soft drinks and fruit juices, as well as the manufacturing and supply of food products from its various locations across the country. The petitioner in the present proceedings has assailed the vires of the show cause notice bearing E-File No.GEXCOM/ADJN/GST/ADC/297/2023/2321-23 dated 05.09.2023 issued by the respondent No.2 under the provisions of section 73(1) of the Central Goods and Service Tax Act, 2017 by alleging a purported mismatch between the details furnished by the petitioner in its annual return filed in the form GSTR-9C and the reconciliation statement filed in FORM of GSTR-9C. As per the show cause notice, the Input Tax Credit (ITC) reported in FORM GSTR-9C and the expenses reported in the financial statements, which are required to be disclosed in Ta....
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.... that it is not disputed by the respondents that the notice in Form GST ASMT-10 was not issued. Consequently, the issuance of the impugned show cause notice under Section 73(1) of the CGST Act, 2017, without adhering to the prescribed statutory mandate under Section 61 of the CGST Act, 2017 read with Rule 99 of the CGST Rules, completely vitiates the jurisdiction of the proper officer to issue the said show cause notice. It is therefore submitted that this impugned show cause notice has been issued without any authority of law and in excess of jurisdiction. 5. It is submitted by the learned Senior Counsel that Section 61 of the CGST Act, 2017 can be invoked only upon satisfaction of the jurisdictional fact that there was a discrepancy in the returns filed by the assessee and in the context of the present proceedings the purported discrepancy is in the context of Table 14 of Form GSTR-9C, the returns filed by the petitioner for the period 2017- 2018. The learned Senior Counsel submits that by notifications and amendments to the relevant rules notified by the Government the filing of Table 14 was made optional for the period 2017-2018 and continued to remain optional in the subseq....
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.... the Central Board of Indirect taxes and Customs ("CBIC"), a body formed under the aegis of Respondent No. 1, which were squarely binding on the Respondents. It is therefore apparent that the jurisdictional conditions to invoke Section 61 of the CGST Act are not satisfied in the present case. The Impugned SCN is issued ultra vires the provision of Section 61 of the CGST Act. The Impugned SCN is issued without the authority of law and in excess of jurisdiction. The Notifications/Instructions are summarized in chronological sequence hereunder: * With effect from 01.07.2017 - Form GSTR 9C with Table 14 containing details as to 'Reconciliation of ITC declared in Annual Return (GSTR9) with ITC availed on expenses as per audited Annual Financial Statement or books of account'. Instructions to the said GSTR 9C, in relation to the said Table 14, provided that: "This table is for reconciliation of ITC declared in the Annual Return (GSTR9) against the expenses booked in the audited Annual Financial Statement or books of account. The various sub-heads specified under this table are general expenses in the audited Annual Financial Statement or books of account on which ITC may or may no....
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....cations in respect of Form GSTR-9C have been that the submission of information in Table 14 was optional. Consequently, in issuing the Impugned SCN, Respondent Nos. 2 & 3 have acted in a manner which is arbitrary, perverse, without the authority of law, and in excess of jurisdiction. The petitioner further begs to submit that Respondent No.2 has illegally assumed the jurisdiction to issue the impugned SCN under Section 73(1) of the CGST Act in so much as they have failed to adhere to the mandatory pre-conditions prescribed under Section 61 read with Rule 99 (i.e., to issue Form GST ASMT-10) of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as "CGST Rules"). It is submitted that Section 61 of the CGST Act read with Rule 99 of the CGST Rules requires the proper officer to issue a notice in Form GST ASMT-10, informing the taxpayer of discrepancies in the returns filed by the taxpayer, if any. As such therefore, failure to adhere to the preconditions prescribed under the CGST Act and Rules vitiates the jurisdiction of the proper officer and makes any consequent exercise of power arbitrary, illegal and ex-facie bad in law. 6. The learned Senior Counsel ....
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.... the information required to be entered in Table 14 of Form GSTR-9C pertains to the expenses incurred by the taxpayer, which may include inputs, capital goods, or services. These goods and services procured may be taxable or exempted and may have been procured from registered or unregistered dealers. Consequently, Table 14 of Form GSTR- 9C reconciles the expenses incurred with the Input Tax Credit (ITC) availed, including any excess ITC availed due to the taxpayer's ineligibility and/or blocked credits and the composition scheme. It is submitted that the furnishing of information under Table 14 of FORM GSTR-9C was mandatory; therefore, the issuance of the show cause notice invoking Section 61 of the CGST Act is legally valid. 11. Consequently, the revenue is empowered to issue the impugned demand cum show cause notice in terms of Section 73(1) of the CGST Act, 2017 read with Circular No.31/05/2018-GST, New Delhi, 9th February, 2018 issued by the Central Board of Excise and Customs. The learned counsel for the respondents submits that a statutory remedy is available under the CGST Act, 2017. It is therefore submitted that the petitioner did not avail of the statutory remedy presc....
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....e SC 95. 15. Countering the submissions made by the respondent counsel that the matter can be remanded back to the Department for taking necessary steps for issuance of FORM GST ASMT-10, the learned Senior Counsel, referring to Notification No. 9/2023-Central Tax dated 31.03.2023, submits that even the Standard Operating Procedure (SOP) mandates that FORM GST ASMT-10 must be issued within one month of the filing of the returns. 16. Under such circumstances, any proceedings pertaining to the financial years 2017-18, including those under Section 73 of the CGST Act, 2017, are infructuous as they are barred by limitation prescribed under the CGST Act itself. Consequently, all the time limits prescribed under the statute, as well as relevant notifications, circulars, and instructions, have been exhausted. 17. Additionally, the learned Senior Counsel further submits in rejoinder that the respondents cannot take refuge under Section 75 of the CGST Act, which prescribes that the period of stay granted by a Court is to be excluded for the purpose of computing limitation, as this provision applies only when the stay is granted before the commencement of the limitation period. In th....
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....urther 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." Rule 99 reads as under: "Rule 99 : Scrutiny of Returns (1) Where any return furnished by a registered person is selected for scrutiny, the proper officer shall scrutinize the same in accordance with the provisions of section 61 with reference to the information available with him, and in case of any discrepancy, he shall issue a notice to the said person in FORM GST ASMT-10, informing him of such discrepancy and seeking his explanation thereto within such time, not exceeding thirty days from the date of service of the notice or such further period as may be permitted by him and also, where possible, quantifying the amount of tax, interest and any other amount payable in relation to such discrepancy. (2) The registered person may accept the discrepanc....
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....fficer and inform the proper officer in writing of such payment. (6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1) or, as the case may be, the statement under sub-section (3), in respect of the tax so paid or any penalty payable under the provisions 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) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and 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 person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whiche....
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....hen read with the Rules, is that where, upon filing of returns by the assessee and subsequent scrutiny by the proper officer, discrepancies are noticed, the proper officer is required to intimate such discrepancies to the assessee by issuing a notice in Form GST ASMT-10. Where the assessee accepts the discrepancies and submits an explanation within the prescribed period of 30 days, and such explanation is found to be acceptable by the proper officer, then no further action is required to be taken. It is only in the event that no satisfactory explanation is received within 30 days of the communication of discrepancies, or within such further period as may be permitted by the proper officer, or where the registered person, after accepting the discrepancies, fails to take corrective measures in the return for the relevant month, that the proper officer may initiate appropriate action, including proceedings under Section 73 of the CGST Act. 25. The question that therefore arises is whether a demand-cum-show cause notice issued under Section 73 of the CGST Act, based solely on discrepancies noticed in the returns filed, could have been validly issued by the proper officer without due....
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....at a finding as specified under Section 61(3). 28. In a given case if the discrepancies were notified to the registered person and such discrepancies were accepted and/or rectified, then under section 61(2) no further proceedings is contemplated. Therefore from the facts which are placed before the Court by way of the pleadings, it is clear that no such proceedings was undertaken as contemplated under Section 61 of the GST Act read with Rule 99. Consequently, it prima facie appears that there is no basis for the proper officer to proceed with issuing the show cause notice under Section 73, as a bare reading of the impugned notice clearly reflects that it has been issued solely on the basis of a discrepancy noticed regarding wrongful availment or utilization of Input Tax Credit by the registered person. The absence of any procedure required to be undertaken by the proper officer as mandated under section 61 does not reflect that any opportunity to the petitioner was given as contemplated under section 61 by issuance of GST ASMT-10 Form or notice. Consequently, there was no opportunity granted to the petitioner to explain before the proper officer in respect of the discrepancies p....
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....s of Section 61. Consequently, both the show cause notice and the assumption of powers under enclosure ASMT-12 were declared illegal and unsustainable in law, and were therefore set aside. The relevant paragraphs of the said judgment is extracted below: "15. Chapter XII of the RGST Act, 2017 deals with assessment. Section 59 provides for self-assessment. Section 60 makes provision wine regard to provisional assessment. Section 61 provides for scrutiny or returns. The aforesaid provision being relevant for adjudication of the controversy involved in the instant writ petition is extracted hereinbelow:- "Section 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 ....
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.... that the petitioner, when he submitted a reply on 15.09.2023 sought some more time. However, at the same time, the petitioner submitted its preliminary reply also. The course of action which could be adopted in such cases was either to issue a communication extending time for giving explanation/detailed reply or to apply mind to whatever reply was submitted before the authority. The statutory scheme engrafted in Section 61 does not allow the authority to invoke powers under Section 73 of the Act and issue show cause notice unless the explanation submitted by the registered person is considered. At this stage, we may notice that the expression contained in sub-section (3) of Section 61 clearly indicates that on the explanation offered, proper officer is required to apply its mind. The expression "in case no satisfactory explanation is furnished" is required to be rationally construed and interpreted to make it meaningful and not empty formality. The aforesaid provision is required to be interpreted in the manner that the explanation offered by the registered person is to be examined by the proper officer. Once an explanation is offered, the proper officer is obliged under ....
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....ing distinguishable. On facts, that was not a case where proceedings under Section 73 were initiated on the basis of scrutiny of return. The Department had not initiated any action referable to Section 61 of the Act but independent of that, on certain grounds with regard to classification and consequential tax payable on certain goods. The question which arose for consideration was whether the Department is enjoined to issue a notice under sub-section (3) of Section 61 of the CGST Act, 2017 once returns have been submitted by the assessee before initiating action under Section 74 of the Act or not. While deciding the aforesaid issue, it was held that scrutiny proceedings of return as well as proceedings under Section 74 are two separate and distinct exigencies and therefore, issuance of notice under Section 61(3) cannot be construed as a condition precedent for initiation of action under Section 74 of the Act. 24. At the cost of reiteration, we noticed that present is not a case where jurisdiction under Section 73 has been assumed on ground other than discrepancies found in the return. 25. In the present case, the invocation of jurisdiction under Section 73 is bas....
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....ion submitted under subPage rule (2) is found to be acceptable, the proper officer shall inform him accordingly in FORM GST ASMT- 12." 27. Considering the statutory scheme as engrafted in Section 61(2) read with Rule 99 of the Rules, there is clear scheme of statute that once the explanation with regard to discrepancy in the return is offered and accepted, further proceedings are not required to be drawn. 28. Learned counsel for the respondents laid much emphasis on the enclosure to ASMT-12. It appears that the proper officer under a misconceived notion of law sought to retain jurisdiction contrary to the provisions of law. Where the discrepancy in the return is found, the law requires explanation to be obtained from the registered person. The power under Section 73 could be invoked only when the explanation offered is not satisfactory. Once the explanation is accepted, no further proceedings could be drawn. 29. In view of above, the show cause notice issued to the petitioner is found against the provisions contained in Section 61 of the Act. Resultantly, the show cause notice as well as the assumption of power under enclosure to ASMT-12 both are....
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....andatory by the revenue required invocation of the powers of the proper officer under section 73. 34. The further question urged before this Court is whether the information sought for under Table 14 of Form GSTR-9C was mandatorily required to be furnished by the assessee was optional and therefore was not submitted by the assessee as erupted for non submission of the said form. This is disputed by the respondent authority that the submission of the information in the form was mandatory and not optional at the instance of the assessee. The assessee refers to various circulars to support the contention that the circulars issued by the competent authority in the Government clearly established that the information required to be furnished under Table 14 of GSTR-9C was optional and not mandatory, contrary to the respondents' assertion. The circulars pressed by the petitioner in support of its contention that the information required to be furnished under Table 14 of GSTR-9C was optional will be referred to later in the paragraphs. However, even assuming that this information was mandatory and was not furnished by the petitioner, this non-furnishing formed the basis of the discrepanc....
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....ecisions, held that circulars issued under Section 119 of the Income Tax Act, 1961 and Section 37-B of the Central Excise Act are binding on the Revenue. [ See Navnit Lal C. Jhaveri v. K.K. Sen, (1965) 56 ITR 198 (SC); Ellerman Lines Ltd. v. CIT, (1972) 4 SCC 474 : 1974 SCC (Tax) 304 : (1971) 82 ITR 913 : AIR 1972 SC 524; K.P. Varghese v. ITO, (1981) 4 SCC 173 : 1981 SCC (Tax) 293 : AIR 1981 SC 1922; Union of India v. Azadi Bachao Andolan, (2003) 8 Scale 287, 308; CCE v. Usha Martin Industries, (1997) 7 SCC 47 : (1997) 94 ELT 460; Ranadey Micronutrients v. CCE, (1996) 10 SCC 387 : (1996) 87 ELT 19; CCE v. Jayant Dalal (P) Ltd., (1997) 10 SCC 402 : (1996) 88 ELT 10; CCE v. Kores (India) Ltd., (1997) 10 SCC 338 : (1997) 89 ELT 441; Paper Products Ltd. v. CCE, (1999) 7 SCC 84 : (1999) 112 ELT 765; Dabur India Ltd. v. CCE, (2003) 157 ELT 129] 10. The somewhat different approach in Hindustan Aeronautics Ltd. v. CIT [(2000) 5 SCC 365] by two learned Judges of this Court, apart from being contrary to the stream of authority cannot be taken to have laid down good law in view of the subsequent decision of the Constitution Bench in CCE v. Dhiren Chemical Industries (I) [(2002) 2 SCC....
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.... or involved wrongful availment, the revenue was legally obligated to bring these discrepancies to the assessee's notice by issuing Form GST ASMT-10, as prescribed under Section 61 of the CGST Act, 2017. The failure to do so clearly indicates that the demand and recovery proceedings initiated under Section 73 were without a proper finding that the amount sought to be recovered was wrongfully availed by the petitioner. The scheme of the act itself clearly provides that an opportunity must be granted to the assessee to rectify or at least explain the discrepancies found by the revenue in the scrutiny of the returns. This opportunity was admittedly not offered to the assessee. The revenue, without calling for any explanation from the assessee proceeded to initiate proceeding pass under section 73 by issuing the impugned show cause notice. 39. Under such circumstances, in view of the discussions above read with the judgment of the Rajasthan High Court rendered in Joint Commissioner vs. Goverdhandham Estate Pvt. Ltd. (supra) and which came to be confirmed by dismissal of the SLP filed by the revenue, this Court is of the considered view that the invocation of jurisdiction under Secti....