Nesar Ahmed vs. Assistant Commissioner Of State Tax And 2 Ors.

Held

The Court held that the Petitioner's submission that fresh proceedings under Section 74 could not be initiated due to the prior dropped cancellation proceedings was fundamentally misconceived. The Court reasoned that proceedings for cancellation of registration are entirely different from adjudication proceedings concerning tax liability, fraud, or willful misstatement under Section 74. The Court found the challenge to the Demand cum Show Cause Notice dated 04.10.2025 to be without merit and accordingly rejected it. However, for the ends of justice, the Court granted the Petitioner an opportunity to file a reply to the notice within 30 days from the date of the order, allowing him to raise all permissible contentions. The Court also directed that the period from 05.10.2025 until the date of the order be excluded when computing the limitation period for passing an adjudication order, acknowledging that the Court had effectively 'put the clock back' by allowing the Petitioner to file a reply.

Facts

The Petitioner, Nesar Ahmed, proprietor of M/s Rhino Metals, filed a writ petition challenging a Demand cum Show Cause Notice dated 04.10.2025 issued by the Assistant Commissioner of State Tax under Section 74 of the Assam Goods and Services Tax Act, 2017. The notice pertained to the Financial Year 2024-25. The Petitioner argued that since proceedings for cancellation of his registration, initiated earlier, were dropped by an order dated 09.05.2025, fresh proceedings under Section 74 could not be initiated. The Revenue stated that no final order had been passed pursuant to the impugned notice.

Key Issues

1. Whether the initiation of proceedings under Section 74 of the Assam Goods and Services Tax Act, 2017, is permissible when prior proceedings for cancellation of registration were dropped, turning on the interpretation of Section 74 and the distinction between cancellation proceedings and adjudication proceedings. Petitioner's contention: The Petitioner argued that the initiation of proceedings under Section 74 was impermissible because the earlier proceedings for cancellation of registration, which were dropped on 09.05.2025, precluded any fresh proceedings under Section 74. The Petitioner relied on the principle that once a matter has been decided or dropped, it should not be reopened. Revenue's contention: The Revenue, through the learned Additional Advocate General, argued that proceedings for cancellation of registration are distinct from adjudication proceedings under Section 74, which deal with issues like non-payment, short payment, erroneous refund, or wrong utilization of Input Tax Credit due to fraud or willful misstatement. The Revenue did not explicitly cite any specific provisions, circulars, or precedents but relied on the fundamental distinction between the two types of proceedings.