M/S Chaurasia Enterprises vs. The Union Of INDIA

Held

The Court held that the limitation period for initiating proceedings under Section 73 of the GST Act stands extended to the extent of periods exempted by the Supreme Court and any subsequent government notifications. Regarding the contention that Section 73 proceedings must be preceded by scrutiny under Section 61 and ASMT-10 notice, the Court ruled that Section 73 is a standalone provision that can be invoked independently when the Proper Officer believes tax has not been paid, short-paid, erroneously refunded, or input tax credit wrongly availed/utilized (excluding fraud). The Court clarified that while scrutiny is a procedure, Section 73 proceedings are initiated based on the Proper Officer's belief of tax escapement, and a notice under Section 73 itself is sufficient, not necessarily preceded by ASMT-10. However, the Court found that in several writ petitions (CWJC No. 4180 of 2024 and others listed), assessment orders were passed without granting a personal hearing as mandated by Section 75(4). Consequently, these orders were set aside due to the violation of the statutory mandate for personal hearing. The matters were remitted to the respective Assessing Officers to issue notices for affording an opportunity of personal hearing and to pass orders within three months or the remaining limitation period. For petitions where a personal hearing was afforded (CWJC No. 4505/2024 and others listed), the Court found no reason to interfere with the impugned orders. The ratio is that while procedural compliances like limitation and the initiation of Section 73 proceedings are to be followed, the statutory right to a personal hearing under Section 75(4) is sacrosanct and its violation warrants remand.

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 challenging orders passed under the GST Act. The petitions raised contentions related to limitation periods, the procedure for scrutiny of returns under Section 61 and Rule 99, and the requirement of personal hearing under Section 75(4). The revenue authorities, including the State of Bihar and the Union of India, were respondents. The tax periods in dispute were not explicitly stated for all petitioners, but the limitation period discussions referred to 2017-18, 2018-19, and 2019-20.

Key Issues

1. Whether the limitation period for initiating proceedings under Section 73 of the GST Act is extended by the periods excluded by the Supreme Court's orders and any subsequent government notifications. (Question of law turning on Section 73 and relevant notifications). 2. Whether proceedings under Section 73 of the GST Act can be initiated without first undertaking a scrutiny of returns under Section 61 and issuing a notice in Form GST ASMT-10 as prescribed by Rule 99. (Question of mixed law and fact turning on Sections 61, 73, and Rule 99). 3. Whether an opportunity of personal hearing must be granted under Section 75(4) of the GST Act when a reply to a notice under Section 73 has been submitted and an adverse decision is contemplated. (Question of law turning on Section 75(4)). Petitioner's arguments: - The limitation period should be extended as per Supreme Court orders and notifications. - Proceedings under Section 73 are contingent upon prior scrutiny under Section 61 and issuance of ASMT-10 notice. - A personal hearing is mandatory under Section 75(4) when an adverse decision is contemplated, even without a specific request. Revenue's arguments: - Not explicitly recorded in the provided text, but implicitly, the revenue likely contended that the impugned orders were validly passed and the petitioners' grounds were without merit.