The Punjab & Haryana High Court in the case of J.S.B. Trading Co. versus State of Punjab has held that once matter is dropped at ASMT-10 Level, no further proceedings can be initiated under Section 74 Of GST Act.
The bench of Justice Sanjeev Prakash Sharama and Justice Sanjay Vashisth has observed that a Proper Officer cannot take contradictory views in DRC-01A and ASMT-12. Accepting the taxpayer’s response in ASMT-12 signifies that the matter is resolved. Once proceedings are dropped under Section 61, reissuing notices for the same matter under Section 74 breaches procedural fairness.
The court, while cancelling the Section 74 proceedings, emphasized that repeated actions on the same assessment are unfair to taxpayers.
The petitioner/assessee – firm is stated to be dealing in the business of sale and purchase of iron scrap. It claimed purchases amounting to sum of Rs. 49,45,578/- from M/s RP Metals and M/s Amarinder Singh.
A notice dated 05.09.2022 under Section 61 of Punjab GST/CGST Act, 2017 was issued for scrutiny of the return by the Proper Officer to explain about the ITC claimed on the purchases, alleging that during the period 2017-18, the firm had claimed ITC from four different firms, whose registration had already been cancelled, and therefore, the petitioner was directed to prove the genuineness of the claim regarding ITCs.
The petitioner submitted its reply to the notice and was intimated, vide GST ASMT-12 that their reply had been found to be satisfactory, and no further action is required to be taken in the matter for the financial year 2017-18.
At the same time, on 23.02.2023, an intimation under Rule 142 (1) (A) in Form GST DRC 01A was issued for FY 2017-18, in which it was mentioned that reply to the notice under Section 61 in Form ASMT-10 of GST Act, 2017 was not found to be satisfactory and the demand was, therefore, raised for a sum of Rs.17,96,557.
The court noted that once, the notice was issued to the petitioner under Section 61(1) of the Act, he filed his reply and explained how ITC had been claimed as against the business conducted with the concerned parties. The same was assessed by the concerned officer and the Proper Officer passed an order independently dropping the proceedings under Section 61(2) of the Act, 2017. However, if the proceedings are only consequential i.e. when the Proper Officer reaches to a conclusion that the reply is not satisfactory. In the letter issued on 23.02.2023, while ascertaining the liability of the petitioner under Section 74(5) of the Act, the concerned Proper Officer also mentions that reply to notice under Section 61 is not found satisfactory.
The court held that there are two different views expressed by the same Proper Officer, one while intimating the liability under Section 74(5) of the Act and the other by subsequently dropping the proceedings under Section 61(2) on 28.02.2023.
The court allowed the writ petition by quashing and setting aside the order dated 14.06.2023 and notice issued under Section 74(1) dated 21.04.2023.
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Case Details
Case Title: J.S.B. Trading Co. versus State of Punjab
Case No.: CWP-14843-2023 (O&M)
Date: 04/11/2024
Counsel For Petitioner: Paras Jain
Counsel For Respondent: Saurabh Kapoor
