A notice in Form ASMT-10 doesn't have to be issued before the tax authorities can decide on a tax case, even if they reviewed the tax returns.

Issue: Both writ petitions challenge the demand orders issued by the GST authorities for discrepancies found in the petitioners' tax returns. The petitioners argue that the authorities failed to follow proper procedure by not issuing notices in Form ASMT-10 before initiating the proceedings.

Background:

• W.P.No.15307 of 2024: The petitioner received a show cause notice for a mismatch between GSTR-1 and GSTR-3B returns. The petitioner claims they were unaware of the proceedings due to a lack of proper notice.
• W.P.No.15330 of 2024: The petitioner received a show cause notice for disclosing a lower sales turnover compared to the purchase turnover. The petitioner replied to the notice but claims their explanation was not considered.

Arguments Presented:

• Petitioners:
  • Notice in Form ASMT-10 is mandatory before issuing a show cause notice under Section 73 of the GST Act.
  • Non-issuance of the ASMT-10 notice prejudices the taxpayer's opportunity to explain discrepancies and avoid penalties.
• Respondent (GST Authorities):
  • Issuing notice in Form ASMT-10 is not mandatory for initiating proceedings under Section 73.
  • Scrutiny under Section 61 is separate from adjudication under Section 73.

Court's Findings:

• The court concludes that issuing notice in Form ASMT-10 is not mandatory for initiating adjudication under Section 73. However, the scrutiny process and the ASMT-10 notice are vitiated if not conducted properly.
• The court acknowledges that the petitioners were not given a proper opportunity to respond to the discrepancies found in their tax returns.

Court's Order:

• W.P.No.15307 of 2024: The impugned order is set aside conditionally. The petitioner needs to pay 10% of the disputed tax demand and submit a reply to the show cause notice within 15 days. The GST authorities must then consider the reply and issue a fresh order within 3 months.
• W.P.No.15330 of 2024: The impugned order is set aside, and the matter is remanded for reconsideration. The petitioner can submit an additional reply within 15 days. The GST authorities must consider the reply, grant a hearing to the petitioner, and issue a fresh order within 3 months.

GST CASE LAW  Mandarina Apartment Owners Welfare Association (MAOWA), M/s.Gani Fashion Versus Commercial Tax Officer

Citation-2024 TAXONATION 1631 (MADRAS)

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