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2023 (5) TMI 712 - HC - GSTValidity of proceedings u/s 74 without issuing SCN for Scrutiny of GST returns - no deficiency in returns pointed out - condition precedent for initiation of action under Section 74 of CGST Act - Requirement to issue a notice under subsection 3 of Section 61 of Central Goods and Service Tax Act, 2017 once returns have been submitted by the assessee before initiating action under Section 74 of the Act or not - HELD THAT - In the present case it does not appear that any discrepancy was noticed by the department in the returns of the petitioner nor any such deficiency was pointed out to the assessee for it to be rectified by it. The returns, therefore, remain intact. It is later at the stage of consideration of the return that the department has found that proper tax has not been deposited and consequently proceedings under Section 74 has been initiated and concluded against the petitioner. In the statutory scheme the course followed by the department would clearly be permissible in law. The argument that unless deficiency in return is pointed out to the assesee, and an opportunity is given to rectify such deficiency, that the department can proceed under Section 74 is not borne out from the statutory scheme and the argument in that regard therefore, must fail. The scrutiny proceedings of return as well as proceeding under Section 74 are two separate and distinct exigencies and issuance of notice under Section 61(3), therefore, cannot be construed as a condition precedent for initiation of action under Section 74 of the Act. Merely because no notices were issued under Section 61 of the Act would mean that issues of classification or short payment of tax cannot be dealt with under Section 74 as exercise of such power is not dependent upon issuance of notice under Section 61. The argument is misconceived is thus, repelled - Petition dismissed.
Issues:
The issue in this case is whether the department is required to issue a notice under subsection 3 of Section 61 of the Central Goods and Service Tax Act, 2017 after the assessee has submitted returns before taking action under Section 74 of the Act. Details of Judgment: The petitioner, an assessee under the GST regime, had submitted returns for the assessment year 2019-20. The department initiated proceedings under Section 74 against the petitioner regarding the classification and tax payable on certain goods. The department found a shortfall in the tax previously paid and demanded the deposit of the shortfall, along with interest and penalty. The petitioner argued that since returns were submitted, the department should have pointed out any deficiencies in the returns before proceeding under Section 74. Section 61 of the Act allows the proper officer to scrutinize returns, inform the assessee of any discrepancies, and take appropriate action if the discrepancies are not rectified. The court noted that in this case, no discrepancies were noticed in the returns, and the department proceeded with Section 74 without pointing out any deficiencies. The court held that the scrutiny of returns under Section 61 and proceedings under Section 74 are separate, and the department can initiate action under Section 74 without issuing a notice under Section 61(3). The court also addressed a judgment cited by the petitioner, stating that it did not restrict the exercise of jurisdiction under Section 74 based on the issuance of a notice under Section 61(3). The court rejected the argument that classification or tax payment issues cannot be addressed under Section 74 without a notice under Section 61. The court allowed the petitioner to file an appeal within two weeks, without objections to the limitation, if the appeal is filed. The petition was dismissed, subject to the above observations.
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