2022 (6) TMI 358 - HC - GST

Seeking to allow petitioner to adjust the credit amount which was blocked - Section 74(5) of the Tamilnadu Goods and Services Tax Act - HELD THAT - The issue has already been settled in numbers of cases, where, as per the Scheme under Section 74 of the act, first notice should be given or option should be given to the dealer under Section 74(5) of the Act and if the option is not utilised or responded by the petitioner dealer, then only further notice under Section 74(1) should be issued, thereafter, on receipt of reply or otherwise and considering the same, after giving personal hearing, the Revenue should continue to proceed with Section 74 proceedings. Here in the case in hand, in the notice dated 01.11.2021, it is wrongly mentioned as Form GST ASMT-10 and that has been replied on 24.11.2021. Thereafter, straight away the order under Section 74(1) was issued on 09.12.2021. Therefore, it is a clear case where procedure contemplated under Section 74 especially, under Section 74(5) has not been complied with. Therefore, on that ground, this Court is inclined to set aside the order and remand the matter back to the respondents. The matter is remanded back to the respondents for reconsideration and while reconsidering the same, the procedure contemplated especially in the context of Section 74(5) and 74(1) should be strictly followed by giving an opportunity to the petitioner including personal hearing - Petition disposed off.

Summary

Issues:
1. Failure to follow the proper procedure under Section 74 of the Tamilnadu Goods and Services Tax Act in issuing notice and passing orders.

Analysis:
The petitioner, a dealer under the TNGST regime, challenged the proceedings of the 1st respondent regarding the adjustment of a credit amount. The issue arose from a notice issued in Form GST ASMT-10 for the Assessment Year 2019-2020, which should have been issued under Section 74(5) of the Act. Despite the petitioner's response to the notice, an order was passed under Section 73(1) of the Act without following the prescribed procedure under Section 74.

The Court noted that the procedure under Section 74 requires the issuance of the first notice or option to the dealer under Section 74(5) of the Act. Only if the dealer does not utilize or respond to the option, a further notice under Section 74(1) should be issued. In this case, the initial notice incorrectly mentioned Form GST ASMT-10 and was followed by an order under Section 74(1) without complying with the requirements of Section 74(5). As a result, the Court set aside the order and remanded the matter back to the respondents for proper reconsideration.

After hearing arguments from both parties, the Court emphasized the importance of strictly following the procedures outlined in Section 74(5) and 74(1) during reconsideration. The Court directed the respondents to provide the petitioner with an opportunity for personal hearing and to pass orders on the matter based on merits and in accordance with the law. The Writ Petition was disposed of with these observations and directions, with no costs imposed, and the connected Miscellaneous Petition was closed.