Issuance of Notice in Form ASMT-10 Is Mandatory If Discrepancies Are Noticed Upon Scrutiny of GST Returns | HC

Case Details: Mandarina Apartment Owners Welfare Association (MAOWA) v. Commercial Tax Officer/State Tax Officer - [2024] 164 taxmann.com 803 (Madras)

Judiciary and Counsel Details

• Senthilkumar Ramamoorthy, J.
• Ms G. Vardini Karthik & Prakash T.C. for the Petitioner. 
• C. Harsha Raj, Addl. Govt. Pleader (Taxes) for the Respondent.

Facts of the Case

The petitioner received a show cause notice (SCN) calling upon him to show cause with regard to disclosing a lower sales turnover in comparison to the purchase turnover. It replied to the SCN but the order was passed against it. It filed writ petition and contended that the order was passed without issuing notice in Form ASMT-10.

High Court Held

The Honorable High Court noted that as per Section 61, upon fulfilment of two conditions, namely, selection of returns for scrutiny and discovery of discrepancies on such scrutiny, there is a mandatory obligation to issue ASMT-10. The notice requirement is intended to enable the registered person to explain or accept the discrepancy and pay tax and interest and thereby avoid a penalty.

Therefore, the ASMT-10 notice is mandatory if the two conditions set out above are satisfied. However, the consequence of not issuing the ASMT-10 notice, despite noticing discrepancies after selecting and scrutinizing returns, would be that it vitiates the scrutiny process, including the discrepancies noticed thereby and the quantification, if any, done in the course thereof.

But, in the instant case, the Court noted that the petitioner was provided an opportunity to show cause under Section 73 and it can’t be said that the adjudication was based only on the scrutiny under Section 61 or that the petitioner was prejudiced. The Court also referred matter for reconsideration since the Revenue agreed to issue a notice in Form ASMT-10 before proceeding further.

List of Cases Reviewed

• Vadivel Pyrotech (P.) Ltd. v. Assistant Commissioner (ST) [2022] 144 taxmann.com 179 (Madras) (Para 17) distinguished.

List of Cases Referred to

• CIT v. Hitech Arai Ltd. [2014] 51 taxmann.com 91/227 Taxman 216/368 ITR 577 (Madras) (para 4),
• Pepsico India Holdings (P.) Ltd. v. Union of India [2023] 157 taxmann.com 428/[2024] 102 GST 43/81 GSTL 470 (Gauhati) (para 4),
• Vadivel Pyrotech (P.) Ltd. v. Asstt. Commissioner (ST) [2022] 144 taxmann.com 179/[2023] 95 GST 10/68 GSTL 120 (Madras) (para 4),
• Graziano Trasmissioni v. GST [2024] 163 taxmann.com 126/104 GST 92/86 GSTL 4 (Allahabad) (para 4),
• Asstt. CIT v. Hotel Blue Moon [2010] 188 Taxman 113/321 ITR 362 (SC) (para 4),
• Shri Tyres v. State Tax Officer [2021] 133 taxmann.com 319 (Madras) (para 4),
• Devi Traders v. State of Andhra Pradesh [2023] 152 taxmann.com 22/98 GST 702/75 GSTL 134 (Andhra Pradesh) (para 6)
• Amardeep Singh v. Harveen Kaur Civil Appeal No.11158 of 2017, (para 6).