M/S Schwing Stetter (INDIA) Private Limited vs. Union Of INDIA

Held

The Court held that the limitation period for issuing notices and orders under the GST Act is indeed extended by the period excluded by the Supreme Court's orders. However, the extent of this extension is limited by any notifications issued by the respective governments. The Court found no reason to interfere with the orders on the ground of limitation, as the excluded periods fell within the extended limitation periods. Regarding the necessity of prior scrutiny under Section 61 before initiating proceedings under Section 73, the Court held that Section 73 is a standalone provision and can be invoked independently when it appears to the Proper Officer that there has been an escapement of tax, erroneous refund, or wrongful claim of input tax credit. It is not mandatory for such proceedings to be preceded by a notice in Form GST ASMT-10. The Court emphasized that Section 75(4) mandates an opportunity of hearing where an adverse decision is contemplated against a person chargeable with tax or penalty. Therefore, if a reply has been submitted to a notice issued under Section 73 and an adverse order is contemplated, the Assessing Officer must provide an opportunity for a personal hearing. The Court set aside assessment orders passed without granting a personal hearing and remitted these matters back to the respective Assessing Officers for affording an opportunity of personal hearing. For cases where a personal hearing was afforded, the Court found no reason to interfere with the impugned orders.

Facts

Multiple petitioners, including M/s Barhonia Engicon Private Limited, Vinod Singh, M/s Anand Consultant, Technoculture Building Centre Pvt Ltd, M/s Devendra Prasad, M/s Shankar Traders, M/s Nirav Enterprises, M/s Harilal Ventures Private Limited, and others, filed writ petitions before the Patna High Court. The petitions challenged various orders passed by GST authorities. The core of the dispute revolved around the interpretation and application of GST provisions concerning limitation periods for issuing notices and orders, the necessity of prior scrutiny proceedings under Section 61 before initiating proceedings under Section 73, and the mandatory requirement of a personal hearing under Section 75(4) before passing adverse orders. The petitioners sought to set aside the assessment orders and other actions taken by the revenue authorities.

Key Issues

1. Whether the limitation period for issuing notices and orders under the GST Act is extended by the period excluded by the Supreme Court's orders in Suo Motu Writ Petition (Civil) No. 3 of 2020, and if so, to what extent? 2. Whether proceedings under Section 73 of the GST Act can be initiated without first conducting a scrutiny of returns under Section 61 and issuing a notice in Form GST ASMT-10? 3. Whether an opportunity of personal hearing is mandatory under Section 75(4) of the GST Act before passing an adverse order, even if the assessee has submitted a reply to the notice issued under Section 73? Petitioner's arguments: The petitioners contended that the limitation period for all GST proceedings should be extended by the period excluded by the Supreme Court. They argued that Section 73 proceedings are contingent upon prior scrutiny under Section 61, and without following this procedure, the subsequent proceedings are vitiated. Furthermore, they asserted that Section 75(4) mandates a personal hearing whenever an adverse decision is contemplated, irrespective of whether a request for hearing was made, especially after a reply has been filed. Revenue's arguments: The revenue authorities argued that while the Supreme Court's exclusion period is to be considered, the actual extension of limitation is governed by specific notifications issued by the respective governments. They contended that Section 73 is a standalone provision and does not necessitate a prior scrutiny under Section 61. They also argued that a personal hearing is only required if a request is received or if an adverse decision is contemplated, and that the procedure followed was in accordance with the law.