2025 (7) TMI 1617 - HC - GST

Challenge to order passed u/s 73 of the WBGST /CGST Act 2017 - issuance of SCN u/s 73 of the said Act after an order under Section 74 of the said Act in respect of the identical period having been passed - Vagueness of SCN - ITC availed on account of B2B supply (Including Debit Notes and Amendment) in Table 4(A)(5) of GSTR-3B. Challenge to order passed u/s 73 of the WBGST /CGST Act 2017 - issuance of SCN u/s 73 of the said Act after an order under Section 74 of the said Act in respect of the identical period having been passed - HELD THAT - The show cause under Section 73 and Section 74 of the said Act are issued on distinct and different basis. While in the case of Section 73 of the said Act what is relevant is determination of tax not paid or short paid or erroneously refunded or wrongfully availed or utilized for any reason other than fraud or any wilful misstatement or suppression of facts to evade tax while in the case of Section 74 of the said Act the very basis of issuance of the notice is fraud wilful misstatement or suppression of facts to evade tax. Having regard thereto the respondents cannot be faulted for having issued two separate notices in respect of the self-same period since the basis for issuance of notices are different. Vagueness of SCN - HELD THAT - The petitioner did not challenge the show cause notice at any earlier point of time. Be that as it may upon going through the show-cause notice in Form DRC01 it appears that reference has been made to the liability and the tables in form GSTR-1 a perusal to the forms reveals that the Form GSTR-1 provides for all details of outward supplies of goods or service. Such form inter alia includes supplies attracting tax on reverse charge in table 4B including details of HSN code in table 12 for outward supplies. From the perusal of the show cause dated 13th May 2024 it would be apparent that all particulars in relation to tax liabilities on reverse charge mechanism had been duly provided for by noting down the relevant reference to the table. This apart the show-cause appears to have been uploaded in form DRC-01 in compliance of Rule 142 of the WBGST/CGST Rules 2017 - the aforesaid issue of the show-cause being vague is unsustainable. Independent of the above it is also found that the petitioner chose not to appear before the authorities and make any representation. Only a response to the show cause was filed. Thus the objection appear to have been taken mechanically without pursuing the same. Consequently the same is rejected. ITC availed on account of B2B supply (Including Debit Notes and Amendment) in Table 4(A)(5) of GSTR-3B - HELD THAT - Having regard to the fact that the petitioner having chosen to bypass the appellate remedy and having approached this Court by invoking the writ jurisdiction to challenge an adjudication order that too by placing reliance on the order dated 27th December 2023 cannot now be permitted to hold out that by reasons of non-availability of the appellate tribunal right of the petitioner to question the same is still reserved. In the facts noted above the petitioner cannot be permitted to take advantage of non-constitution of the Appellate Tribunal. In view thereof it is found that such demand in Form GST APL04 dated 27th December 2023 has reached finally and require no further adjudication. Proceeding on the above premise the demand relating to point nos. 1(I) and 3(M) of the show-cause dated 13th May 2024 stands quashed. Having regard thereto the demand raised by the respondents in DRC 07 dated 19th July 2024 is set aside. The respondents are directed to raise a fresh demand in Form GST DRC-7 on the basis of this order - petition allowed by way of remand.

Summary

ISSUES:

Whether a show cause notice under Section 73 of the WBGST/CGST Act, 2017 can be issued for the same tax period after issuance of a notice and order under Section 74 for that period.Whether the show cause notice under Section 73 is vague and lacking in particulars, especially concerning demand under the reverse charge mechanism (RCM).Whether input tax credit (ITC) availed on inward B2B supplies (including debit notes and amendments) already adjudicated under Section 74 can be included again in a subsequent show cause notice under Section 73.Whether non-disclosure of particulars by the taxpayer permits the proper officer to impose demand without scrutinizing records, particularly when the issue has been adjudicated previously.Whether the petitioner can challenge the demand confirmed by an appellate order when the appellate tribunal is yet to be constituted.

RULINGS / HOLDINGS:

The Court held that the issuance of separate show cause notices under Section 73 and Section 74 for the same period is permissible because the scope of these sections is "entirely different," with Section 74 addressing fraud or wilful misstatement and Section 73 addressing other reasons for tax short payment or erroneous refund.The show cause notice under Section 73 was not vague as it referred to particulars in Form GSTR-1, including details of outward supplies and HSN codes, and complied with Rule 142 of the WBGST/CGST Rules, 2017.The inclusion of ITC availed on inward B2B supplies in the Section 73 notice, which had already been adjudicated under Section 74, was impermissible; "such issue could not have been included in the subsequent notice" and the related demand was quashed.Non-disclosure of supporting documents by the petitioner does not relieve the proper officer of the obligation to scrutinize records nor justify imposing demand when the matter has already been adjudicated.The petitioner cannot avoid challenging the appellate order on the ground of non-constitution of the appellate tribunal; having "chosen to bypass the appellate remedy" and invoked writ jurisdiction, the petitioner cannot reserve the right to question the order later.

RATIONALE:

The Court applied the statutory framework of Sections 73 and 74 of the WBGST/CGST Act, 2017, which distinguish between tax determination for reasons other than fraud (Section 73) and for reasons involving fraud or wilful misstatement (Section 74), with differing procedural safeguards and time limits.The Court relied on the explicit language of the Act and the Explanation clauses clarifying that proceedings under Sections 73 and 74 are distinct and may coexist for the same tax period if based on different grounds.Compliance with procedural requirements under Rule 142 and reference to GSTR-1 tables addressed the vagueness challenge, reinforcing the adequacy of particulars in the notice.The Court emphasized the principle that once an issue has been adjudicated and an appellate order confirmed, it attains finality unless challenged by appropriate statutory remedy, rejecting attempts to relitigate the same issue via writ jurisdiction.No dissent or doctrinal shift was indicated; the judgment reaffirmed established statutory interpretations and procedural norms under the GST framework.