Ms R Ess Iron And Steel PVT LTD vs. Union Of INDIA And Ors

Held

The Court held that the non-issuance of Form GST ASMT-10 before initiating proceedings under Section 73 of the AGST Act vitiated the impugned proceedings. The Court reasoned that Section 61 of the AGST Act, read with Rule 99 of the AGST Rules, 2017, clearly contemplates a mandatory procedure where discrepancies noticed during the scrutiny of returns must be communicated to the registered person through Form GST ASMT-10 to provide an opportunity for explanation or rectification. This procedure is not a mere formality but a statutory safeguard. The Court found that the impugned demand, as evidenced by Form GST-DRC-01, was based on an examination and comparison of the petitioner's annual return with other GST returns and records, indicating that the discrepancies were noticed during scrutiny. Therefore, the authorities could not bypass the procedure prescribed under Section 61 and Rule 99 and directly initiate proceedings under Section 73. The Court further held that the petitioner's participation in the subsequent proceedings did not constitute a waiver of this statutory safeguard, nor did the availability of an alternative remedy preclude judicial review under Article 226 when statutory procedures were disregarded. The Court set aside the notice dated 09-01-2024 and the adjudication order dated 30-04-2024, allowing the respondents to proceed in accordance with law, subject to limitations. The Court explicitly stated that it had not examined the correctness of the alleged tax liability or the merits of the petitioner's explanation.

Facts

The petitioner, MS R ESS IRON AND STEEL PVT LTD, a registered dealer under the Assam Goods and Services Tax Act, 2017, challenged a notice (Form GST DRC-01 dated 09-01-2024) and a consequential order (dated 30-04-2024) determining tax liability, interest, and penalty for the financial year 2018-19. The petitioner argued that the revenue authorities failed to follow the mandatory procedure prescribed under Section 61 of the AGST Act read with Rule 99 of the AGST Rules, 2017, which requires issuing a notice in Form GST ASMT-10 after scrutiny of returns before initiating proceedings under Section 73. The petitioner also contended that no personal hearing was granted, violating principles of natural justice and Section 75 of the Act. The respondents, represented by the Finance and Taxation Department, did not file an affidavit but argued that the petitioner participated in the proceedings and had an alternative remedy of appeal under Section 107.

Key Issues

1. Whether, in the facts of the present case, the non-issuance of Form GST ASMT-10 before initiating proceedings under Section 73 of the AGST Act would vitiate the impugned proceedings, particularly when the proceedings are founded upon discrepancies noticed during the scrutiny of returns? Petitioner's Arguments: The petitioner contended that the statutory scheme under Section 61 of the AGST Act and Rule 99 of the AGST Rules, 2017, mandates the issuance of Form GST ASMT-10 to inform the registered person of discrepancies found during scrutiny and to seek an explanation. Failure to issue this notice renders the subsequent proceedings under Section 73 illegal and unsustainable. The petitioner also argued that the denial of a personal hearing violated principles of natural justice and Section 75 of the Act. Revenue's Arguments: The respondents argued that the petitioner participated in the proceedings initiated under Form GST DRC-01 and submitted an explanation, thus waiving the right to question the proceedings on the ground of non-issuance of Form GST ASMT-10. They also contended that issuing Form GST ASMT-10 is not always necessary and that the petitioner has an alternative remedy of appeal under Section 107 of the AGST Act.