SCN Was Not Illegal Where Proper Scrutiny Procedure u/s 61 Was Followed Including Issuance of Discrepancy Notice | HC

Case Details: PepsiCo India Holdings (P.) Ltd. v. Union of India - [2024] 166 taxmann.com 10 (Patna)

Judiciary and Counsel Details

• • K. Vinod Chandran, CJ. & Partha Sarthy, J.
  • Rohan Shah, Ravi Bharuka, Joybrata Misra, Sanjeev Kumar, Manish Mishra, Shareen Gupta & Tanay Vyas, Advs. for the Petitioner.
  • Dr. K.N. Singh, ASG, Anshuman Singh, Sr. SC. CGST & CX, Devansh Shankar Singh, Adv. for the Respondent.

Facts of the Case

The petitioner challenged a demand-cum-show-cause notice issued under Section 74 of the CGST Act, 2017. The petitioner argued that the proper scrutiny procedure under Section 61 of the GST Act was not followed, making the show-cause notice illegal. The petitioner contended that the unreconciled ITC in Column T of Table 14 had been auto-populated and that Table 14 was optional; therefore, it should not be considered a discrepancy.

High Court Held

The Court found that the proper procedure under Section 61, read with Rule 99, was followed in this case. A discrepancy notice, akin to Form GST ASMT-10, was issued to the taxpayer, and an explanation was sought. The assessee provided a reply, but the authorities found the explanation unsatisfactory, leading to the issuance of the show-cause notice under Section 74 of the CGST Act. The Court also stated that if the unreconciled ITC in Column T was auto-populated and noticed by the assessee, it was incumbent upon the assessee to offer an explanation for the same rather than argue that Table 14 was optional.

Therefore, the Court dismissed the writ petition, stating that the show-cause notice was not illegal. The proper procedure was followed, and the petitioner had the opportunity to explain the discrepancies, which they failed to do satisfactorily. However, the Court allowed the petitioner to raise objections against the show-cause notice in subsequent proceedings.