Order based on discrepancies different from those mentioned in scrutiny notice is not sustainable: HC

Case Details: Vadivel Pyrotech (P.) Ltd. v. Assistant Commissioner (ST), Circle-II - [2022] 144 taxmann.com 179 (Madras)

Judiciary and Counsel Details

• • Mohammed Shaffiq, J.
  • N. Viswanathan for the Petitioner.
  • M. Prakash for the Respondent.

Facts of the Case

The petitioner was engaged in the business of manufacture and supply of pyrotechnic products (fireworks). The department undertaken scrutiny of the GST returns and issued scrutiny notice under Section 61 in Form ASMT-10 pointing out certain discrepancies between GSTR-3B and GSTR-1. It submitted reply and after 6 months, an order was passed demanding tax, interest & penalty on basis of defects which were different from the defects/discrepancy which were earlier pointed out in the Form ASMT-10. It filed writ petition to quash summary of show cause notice and consequential orders as same had not been issued in accordance with scrutiny notice.

High Court Held

The Honorable High Court observed that as per GST provisions, the proper officer may scrutinize returns and in case any discrepancies are noticed, the same shall be informed in ASMT-10 seeking explanation from the taxable person. In case the explanation is not satisfactory or no explanation is offered then the proper officer shall proceed to pass order in GST DRC-07. However, in the present case, ASMT-10 was issued for certain discrepancies but DRC-01 and consequential order had been issued/ passed for different discrepancies. Therefore, the impugned order was set aside and matter was remanded to assessing officer for re-assessment.