TaxTMI 
TaxTMI 
Non issuance of SCN mandated under Section 74.
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....on issuance of SCN mandated under Section 74.<br> Query (Issue) Started By: - Deepak Dated:- 15-6-2026 Last Reply Date:- 19-6-2026 Goods and Services Tax - GST<br>Got 13 Replies<br>GST<br>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....
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.... 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.....
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.... 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. Reply By KASTURI SETHI: The Reply: 2022 (12) TMI 590 - JHARKHAND HIGH COURT - Thriveni Earthmovers PVT. LTD. Versus State of Jharkhand ....
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.... 2025 (6) TMI 1845 - GAUHATI HIGH COURT - Phanidhar Borsaikia Versus State of Assam Reply By KASTURI SETHI: The Reply: 2025 (8) TMI 157 - GAUHATI HIGH COURT - Naser Ali Mondal Versus State of Assam Reply By KASTURI SETHI: The Reply: 2024 (12) TMI 828 - GAUHATI HIGH COURT - Dihingia Motors Pvt. Ltd. Versus Union of India Reply By KASTURI SETHI: The Reply: Thriveni Earthmovers PVT. LTD. Versus State of Jharkhand - 2022 (12) TMI 590 - JHARKHAND HIGH COURT Reply By YAGAY andSUN: The Reply: Based on the facts you have stated, I would approach the appeal on two separate tracks: Track A - Jurisdictional/procedural ....
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....illegality (primary ground) • No SCN under Section 74. • DRC-01 is merely a summary under Rule 142; it cannot substitute the statutory SCN. • Absence of specific allegations establishing fraud, wilful misstatement or suppression. • Violation of principles of natural justice. Track B - Merits (without prejudice) • Reconciliation of GSTR-2A vis-a -vis GSTR-3B. • Supplier-wise analysis and supporting documents. Now to your questions: 1. Should you submit reconciliation before FAA? Yes, preferably. Even if your primary case is that the proceedings are void due to absence of SCN, always file reconciliation and supporting documents without prejudice. R....
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....eason: • If FAA agrees with you on SCN defect, matter may be remanded/quashed. • If FAA disagrees and examines merits, you already have material on record. • Appellate authorities generally appreciate a complete record. Do not rely solely on procedural grounds. 2. Can Department invoke Section 160? They will likely try. However, Section 160 protects proceedings from minor mistakes, defects or omissions. Non-issuance of a statutory SCN under Section 74 is not a mere procedural irregularity; it goes to: • jurisdiction, • assumption of power under Section 74, • natural justice. If no proper SCN containing allegations of fraud/suppression was issued,....
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.... Section 160 should not cure that defect. 3. On what basis can FAA allow or reject? FAA may allow appeal if it finds: • DRC-01 alone was issued. • No proper SCN under Section 74. • No allegation establishing fraud/suppression. • No meaningful opportunity of defence. FAA may reject if it concludes: • the DRC-01 itself contained all ingredients of a valid SCN, • taxpayer had sufficient notice and opportunity, • defect is curable and no prejudice caused. Therefore, preserve evidence showing that DRC-01 contained only a summary demand and not a detailed SCN. Reply By YAGAY andSUN: The Reply: Continued from above point no. 3 4. What sho....
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....uld you do during appellate hearing? Carry: • GST portal screenshots showing only DRC-01 uploaded. • Download history of notices/orders. • DRC-01A, DRC-01, DRC-07 and impugned order. • GSTR-2A/2B reconciliation. • Purchase register. • Tax invoices. • Written submissions in chronological sequence. Specifically argue: • No SCN under Section 74. • No allegation of fraud/suppression. • Section 74 invoked mechanically. • Violation of natural justice. • Merits support admissibility of ITC. 5. How to verify jurisdiction of State Tax Officer? Check: • Registration certif....
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....icate jurisdiction. • State GST administrative allocation orders. • Commissionerate/division/circle notifications issued by Tamil Nadu GST authorities. • Delegation orders empowering officers to adjudicate under Sections 73/74. Circular No. 03/03/2017-GST primarily concerns cross-empowerment and administrative control between Central and State tax authorities. It may be relevant in limited situations, but for a State GST officer's adjudicatory jurisdiction, the more important documents are the State Government's allocation and delegation notifications. Practical advice For this client, I would not argue only "no SCN". I would file a dual defence: • Proceedings under Sectio....
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....n 74 are invalid for want of proper SCN and absence of fraud allegations. • Even on merits, ITC is admissible based on reconciliation and supporting documents. That gives you the best chance whether the FAA decides the matter on procedure, merits, or both. Reply By YAGAY andSUN: The Reply: For a first appeal under GST, one practical lesson is: never assume the FAA will decide only on the strongest legal ground. Even where the SCN itself is defective or absent, many appellate authorities prefer to examine whether the taxpayer has suffered actual prejudice and whether the demand is sustainable on merits. Therefore, your approach of taking both procedural and substantive grounds is usually the safest. A few additional p....
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....oints that may help: • Preserve portal evidence. Download the "View Notices and Orders" history and maintain screenshots showing exactly what documents were uploaded. If only DRC-01 exists and no separate SCN is available, that becomes important evidence. • Attack Section 74 specifically. A mere GSTR-2A vs GSTR-3B mismatch does not automatically establish fraud, wilful misstatement or suppression. The burden to justify invocation of Section 74 lies on the department. • Emphasize prejudice. If the DRC-01 did not contain detailed allegations, supplier-wise discrepancies, basis of computation, or reasons for alleging fraud, highlight how the taxpayer was deprived of an effective opportunity to defend. ....
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.... • Request a speaking order. During hearing, specifically ask the FAA to record findings on: • Whether a valid SCN under Section 74 existed. • Whether ingredients of Section 74 were established. • Whether Section 160 can cure the defect. • Whether the demand survives on merits. On Section 160, your strongest response is usually that it cures defects in form, not the absence of a mandatory statutory requirement. If the foundation itself is missing (e.g., no valid SCN or no allegation supporting Section 74), the department may find it difficult to characterize that as a mere procedural defect. Finally, for future cases in your district, consider maintaining a small database of....
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.... orders where only DRC-01 was issued. If a pattern emerges, it may become useful in demonstrating that the issue is systemic rather than an isolated administrative lapse. I think your appeal strategy; challenging the validity of proceedings first, while simultaneously producing reconciliation and merits evidence, is the correct and defensible approach. Reply By Deepak: The Reply: Thanks a lot for the detailed reply. I will make sure to incorporate your suggestion before appearing at FAA and will also update the same in future. From now, i will follow your two step approach for this in any further appeals before FAA i present. Reply By KASTURI SETHI: The Reply: In addition to Comprehensive reply by M/s.Yagay And Sun, Sirs, also ....
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....focus on the following :- "The client did not reply or did not personal hearing and hence order passed". Non-filing reply and not-attending personal hearing make the party's defence weakest. Reply By Deepak: The Reply: Thank you so much for the case laws you provided sir. It provided clarity for me. As you said in yesterday's reply, the client did not file reply or personal hearing, this is the biggest area i don't know how to handle as he is new to me and he just wants to file appeal and participate in the proceedings and nothing else. How to navigate this area, Sir. Any guidance would be most welcome or there is chance of losing this case. I kindly request you to provide some clarity in this matter sir. Reply By ....
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....KASTURI SETHI: The Reply: This is with reference to serial no.8.1 above Various High Courts have accepted the pleas of the petitioners on medical ground. You can search on AI Tools of TMI Website or on Google (AI Mode). (i) The party's advocate was ill. (ii) The party's Accountant (dealing with GST) was ill. (iii) The owner (assessee) of the unit was ill. (iv) The owner's close relative was ill. (v) The assessee or his advocate was out of country. You are to see what is genuine reason for not filing reply and not attending P.H and act accordingly. Genuine documentary evidence is required. Emphasis is laid on genuineness. Reply By KASTURI SETHI: The Reply: This is with ....
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....reference to serial no.8.1 above Various High Courts have accepted the pleas of the petitioners on medical ground. You can search on AI Tools of TMI Website or on Google (AI Mode). (i) The party's advocate was ill. (ii) The party's Accountant (dealing with GST) was ill. (iii) The owner (assessee) of the unit was ill. (iv) The owner's close relative was ill. (v) The assessee or his advocate was out of country. You are to see what is genuine reason for not filing reply and not attending P.H and act accordingly. Genuine documentary evidence is required. Emphasis is laid on genuineness. Reply By KASTURI SETHI: The Reply: "Any guidance would be most welcome". Politeness, h....
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....umbleness and discipline before the judge or any officer is an absolutely must. <br> Discussion Forum - Knowledge Sharing ....