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TMI BlogScruitiny of ReturnsX X X X Extracts X X X X X X X X Extracts X X X X ..... Sec 73(1) Where it appears to the proper officer........... So when a notice is issued demanding tax for violation of say 16(4) straight away under Sec 73 is it possible to argue that To Appear anything to officer an investigation or assessment is required. The department cannot straight away launch Demand and Recovery mechanisms. In this case 16(4) violation can APPEAR to Officer only after undertaking a scrutiny of returns. So ASMT 10 proceedings are mandatory before initiating Sec 73(1) . The officer has to follow the due process and cannot skip the process. - Reply By KASTURI SETHI - The Reply = Your view is correct. The issuance of SCN for recovery is the last resort. - Reply By Shilpi Jain - The Reply = There was a decision of one HC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that ASMT 10 is not a pre-requisite in such cases. - Reply By KASTURI SETHI - The Reply = Rule 99(1) of CGST Rules ------------he shall issue a notice to the said person in F ORM GST ASMT-10 *, informing him of such discrepancy and seeking his explanation thereto within such time. The word, 'shall' stands for mandatory and obligatory meaning and essence. - Reply By KASTURI SETHI - The Reply = No proper officer has power to dilute this mandatory requirement. - Reply By Padmanathan Kollengode - The Reply = I beg to disagree. If on the face of the returns filed by the tax payer itself, the proper officer finds that the ITC is barred under section 16(4) , why undertake a detailed scrutiny? - Reply By Amit Agrawal - The Reply = I beg to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agree with Shri Padmanatham Ji for his disagreement! If on the face of the returns filed by the tax payer itself, the proper officer feels that ( i.e. appears to to the proper officer ) the ITC is barred under section 16(4) ( i.e. For example: Return for March, 22 showing ITC availed got filed in FY 2023-24 ), he can directly issue SCN u/s 73 without taking any scrutiny of returns etc. And, tax-payer is well within his rights to defend ITC so availed. But challenge to SCN itself, on the ground that Form ASMT-10 was not issued before issuance of SCN u/s 73 , will not be legally sustainable IMHO. These are ex facie views of mine and the same should not be construed as professional advice / suggestion. - Reply By VENU K - The Reply = In my hum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble opinion the scheme of taxation in GST generally is to make an assessment of tax liability using provisions in Chapters XII,XIII or XIV and then go for a demand and recovery under Sec 73 or 74 . Chapter XII talks about assessment which basically is a determination of tax liability using , self assessment, provisional assessment, scruitiny, assessment of non filers, assessment of unregistered persons , summary assessment etc and Chapter XIII talks about Audits and Chapter XIV talks about Inspection, Search, seizure etc.Using any of the above procedures it might appear to the proper officer that taxes have been short paid .In such situation Sec 73 or 74 visualises Demand and Recovery . In my humble opinion determination of tax liability ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to essentially happen through assessment or audit or enquiry to logically invoke provisions of 73 or 74 . Otherwise how can a liability apppear to the officer? In the above opinions of esteemed experts , I feel, it was assumed that Scruitiny must essentially involve some sophisticated procedures. Probably , like manufacture where it is essential to undertake certain process and something new having distinct charecter etc should emerge. In my opinion even visually picking up and glancing at my returns amount to scruitiny as it amounts to scruitinising of returns and related particulars submitted by the registered person .There is no need to complicate the word scruitiny by giving some artificial or mandatory processes being essential to am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount something as scruitiny . Scruitiny can be a visual one by merely glancing at the data or by using just pen and paper or by using a calculater or by using excell or even by subjecting the particulars to sophisticated computer analysis. Further when in 2024 the officer unearths something that happened in financial year 2017-18 how can we say that it was not as a result of scruitiny of returns ? My whole point is, some tax liability can appear to the officer only as a result of an underlying verification or enquiry . Please note that there is no independent power to demand and recover taxes found due as a result of scruitiny, audit or even search and seizure.The officer has to invoke 73 or 74 in all such cases. - Reply By Amit Agrawal - T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Reply = Dear Querist, First, kindly note that SCN u/s 73 denying ITC availed in FY 2017-18 cannot be issued in year 2024. For the underlying dispute with Dept. about potential breach of time-limit prescribed under Section 16(4) for availing ITC in FY 2017-18, one of the recommendations of 53rd GST Council Meeting held on 22-06-2024, is worth noting and same is as follows: In respect of initial years of implementation of GST, i.e., financial years 2017-18, 2018-19, 2019-20 and 2020-21: The GST Council recommended that the time limit to avail input tax credit in respect of any invoice or debit note under Section 16(4) of CGST Act , through any return in FORM GSTR 3B filed upto 30.11.2021 for the financial years 2017-18, 2018-19, 2019-20 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 2020-21, may be deemed to be 30.11.2021. For the same, requisite amendment in section 16(4) of CGST Act , retrospectively, w.e.f. 01.07.2017, has been recommended by the Council. Attention is also invited to the Note from Press Release: The recommendations of the GST Council have been presented in this release containing major item of decisions in simple language for information of the stakeholders. The same would be given effect through the relevant circulars/ notifications/ law amendments which alone shall have the force of law . These are ex facie views of mine and the same should not be construed as professional advice / suggestion. - Reply By Padmanathan Kollengode - The Reply = Venu JI, PLs consider this: Section 2(11) defines asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment to mean determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment; As per section 2(11) , determination of tax liability (such as under section 73 or 74 of the Act) in itself is an assessment. Further it also includes self-assessment, re-assessment provisional .... etc etc. As long as the determination of tax liability under 73 or 74 (which is an assessment) confirms to principles of natural justice, I do not see possibility of disturbing the same through Courts.a To put it differently, in this particular case, what prejudice has been caused to you by not issuing ASMT-10 ? - Reply By VENU K - The Reply = Padmanathan Kollengode sir, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thanks for your views.Just few observation on the matter. If Sec 73 or 74 in itself are provisions that allow assessment in GST I have no issues as far as that observation is concerned. But as far as the last point what prejudice did it cause to you ? I have a different opinion. Assuming ASMT 10 is required such a question in my opinion is not relevent. Parliament in its wisdom has laid down a due process in respect of each action.Following this due process is a duty of the Officer and demanding that a due process be followed is a right and even more a responsibility of every tax payer. If the proper officer were to invent a due process he would be legislating on his own.This cannot be allowed in a country where rule of law has been accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the constitution. I think even courts are not allowed to permit such transgressions.Bonafide demands made by following malafide means cannot be brushed aside by an Officer by asking what prejudice did it cause you. Not following the due process in itself is a prejudice in my humble opinion as it is an intergral part of rule of law. useless formality theories have no place in judicial or quasi judicial proceedings and in the matter of principles of natural justice in my humble opinion. - Reply By Padmanathan Kollengode - The Reply = Pls consider M/S DEVI TRADERS VERSUS THE STATE OF ANDHRA PRADESH, REP. BY ITS PRINCIPAL SECRETARY TO GOVERNMENT, STATE TAX DEPARTMENT 2023 (6) TMI 1300 - ANDHRA PRADESH HIGH COURT Due process has role only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if Section 73 / 74 mandated initiation of scrutiny u/s. 61 etc.. as a pre-requisite for determination of tax liability. However, it is not case. Even in the absence of such pre-condition, the determination of tax liability must still be in conformity with Principles of Natural justice. Hence, I am of the view that some prejudice caused to you in the assessment due to non-issuance of ASMT-10 must be show for the maintainability of writ jurisdiction against such SCN. - Reply By KASTURI SETHI - The Reply = Lack of GST Form ASMT-10 vitiated SCN-----Madras High Court reported as 2024 (7) TMI 1158 - MADRAS HIGH COURT. -MANDARINA APARTMENT OWNERS WELFARE ASSOCIATION (MAOWA) VERSUS COMMERCIAL TAX OFFICER/STATE TAX OFFICER - Scruitiny of Returns - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Query Started By: - VENU K Dated:- 15-7-2024 Last Replied Date:- 24-7-2024 Goods and Services Tax - GST - Got 12 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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