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Absence of notice under section 61 does not affect proceedings initiated under section 74


Notice

In a recent legal development, a crucial question has been raised concerning the obligation of the tax department to issue a notice under subsection 3 of Section 61 of the Central Goods and Service Tax Act, 2017. The central query revolves around whether such notice is mandatory after an assessee has submitted returns before initiating action under Section 74 of the Act.


Background

The petitioner, an assessee under the GST regime, had submitted returns for the assessment year 2019-20. While the department initiated no action under Section 61 of the Act, proceedings under Section 74 were initiated against the petitioner on grounds related to the classification and consequent tax payable for specific goods. The department subsequently found a shortfall in the previously paid tax, leading to a demand for the deposit of the appropriate shortfall, along with interest and penalty.


Petitioner's Contentions

The petitioner argues that, given the submission of returns, the department should have pointed out any deficiencies in the returns before resorting to Section 74 proceedings. Section 61 of the Act, 2017, outlines the scrutiny process, indicating that the proper officer may inform the registered person of discrepancies in the return and seek an explanation.


Court's Decision

The court emphasizes that the scrutiny proceedings under Section 61 and the action under Section 74 are distinct. Section 61 deals specifically with the scrutiny of returns, allowing the proper officer to address discrepancies and, if necessary, initiate appropriate actions. In this case, no discrepancies were initially noted in the returns submitted by the petitioner.


The court dismisses the argument that the department must issue a notice under Section 61(3) as a prerequisite for initiating action under Section 74. The judgment clarifies that the statutory scheme does not support such a condition precedent.


Conclusion

In conclusion, the court dismissed the petition, highlighting the petitioner's remedy of filing an appeal, which has not been utilized. The petitioner is granted two weeks to file an appeal, with an assurance that the appeal will be entertained without objections regarding limitation. The judgment underscores the separation of scrutiny proceedings under Section 61 and actions under Section 74 in the context of GST assessments.

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