Procedure under Section 61 of CGST Act, 2017 read with CGST Rule 99, including issuance of Form GST ASMT-10, is mandatory before invoking Section 73 where discrepancy is based on return scrutiny

Procedure under Section 61 of CGST Act, 2017 read with CGST Rule 99, including issuance of Form GST ASMT-10, is mandatory before invoking Section 73 where discrepancy is based on return scrutiny

Facts of the Case

• The petitioner, Pepsico India Holdings Pvt. Ltd., is a company registered under the Companies Act, 1956, and under the CGST Act, 2017 and Assam GST Act, 2017, with its registered office in Assam.
• The petitioner is engaged in marketing soft drinks, fruit juices, and manufacturing and supplying food products across India.
• The Board of the petitioner company authorized Mr. Chitwan Prabhakar to represent the company in these proceedings.
• The petitioner challenged the vires of a show cause notice dated 05.09.2023 issued under Section 73(1) of the CGST Act, 2017, alleging a mismatch between details in the annual return (GSTR-9C) and the reconciliation statement (GSTR-9C), specifically regarding unreconciled Input Tax Credit (ITC) and expenses in Table 14 of GSTR-9C.
• The show cause notice alleged wrongful availment and utilization of ITC amounting to Rs. 19,51,41,111/- for the period 1st July 2017 to 31st March 2018.

Contentions of the Parties

Petitioner

• Submission of information in Table 14 of GSTR-9C was made optional by notifications; non-furnishing cannot be treated as a discrepancy.
• Section 61 read with Rule 99 mandates issuance of notice in Form GST ASMT-10 before a show cause notice under Section 73(1); this was not done.
• Jurisdictional facts for invoking Section 61 were absent; thus, the show cause notice is without authority and in excess of jurisdiction.
• Notifications and instructions from the CBIC made Table 14 optional for FY 2017-18 to 2022-23; tax authorities are bound by these.
• Relied on Bhavnagar University v. Palitana Sugar Mill and Management, Asst. Salt Commr. v. Secy, Cen. Salt Mazdoor Union for statutory compliance.
• Relied on Joint Commissioner v. Goverdhandham Estate Pvt. Ltd. (Rajasthan High Court), affirmed by the Supreme Court, holding Section 61 procedure mandatory before Section 73.
• Alternative remedy is not a bar where jurisdiction is challenged; relied on Godrej Sara Lee v. Excise and Taxation Officer-cum-Assessing Authority.
• Proceedings are barred by limitation; SOP mandates ASMT-10 within one month of return filing; limitation expired before interim order.

Respondents

• Petitioner was given five opportunities for personal hearing but did not attend or reply to the show cause notice.
• Information in Table 14 of GSTR-9C is mandatory; thus, show cause notice under Section 73(1) is valid.
• Revenue is empowered to issue the notice under Section 73(1) read with Circular No.31/05/2018-GST.
• Petitioner did not avail statutory remedy before approaching the Court.
• Relied on Mandarina Apartment Owners Welfare Association v. Commercial Tax Officer, (2024) taxcode.in 444 HC, M/S. Vadivel Pyrotech Private Limited v. The Assistant Commissioner (St), Brahmaputra Television Network v. Union of India, Commissioner of Income Tax v. Chhabil Dass Agarwal, Union of India v. Coastal Container Transporters Association, and GNRC Ltd. v. The Union of India and Ors, (2024) taxcode.in 112 HC to support their contentions.
• Contended that the matter could be remanded for issuance of ASMT-10.
• Argued that Section 75 allows exclusion of stay period for limitation computation.

Issues

• Whether the impugned show cause notice under Section 73(1) of the CGST Act, 2017, issued on the basis of discrepancies in returns, is valid without compliance with the procedure prescribed under Section 61 read with Rule 99 of the CGST Rules.
• Whether the submission of information in Table 14 of Form GSTR-9C was mandatory or optional for the relevant period, and if non-furnishing thereof could constitute a discrepancy justifying proceedings under Section 73.
• Whether the writ petition is maintainable in view of the availability of an alternative statutory remedy.
• Whether the proceedings are barred by limitation under the CGST Act and relevant notifications/circulars.

Decision

A. Statutory Scheme and Mandatory Procedure under Section 61 and Rule 99

• The Court examined Section 61 of the CGST Act, 2017, which requires the proper officer to scrutinize returns and inform the registered person of any discrepancies, seeking an explanation in the prescribed manner. If the explanation is acceptable, no further action is required; if not, further proceedings, including under Section 73, may be initiated. (p21–22)
• Rule 99 of the CGST Rules mandates that, upon selection of a return for scrutiny, the proper officer must issue a notice in Form GST ASMT-10 in case of any discrepancy, seeking an explanation within 30 days. (p23)
• The Court held that the procedure under Section 61 read with Rule 99 is mandatory and must be followed before initiating proceedings under Section 73 based on discrepancies in returns. (p24)

B. Validity of Show Cause Notice under Section 73 Without Compliance with Section 61

• The Court framed the question whether a show cause notice under Section 73, based solely on discrepancies in returns, could be validly issued without compliance with Section 61 and Rule 99. (p25)
• It was held that, from the scheme of the Act and Rules, the proper officer can only conclude wrongful availment or utilization of ITC after scrutiny of returns as per Section 61. No other provision prescribes a different procedure for scrutiny. (p27)
• The Court found that, in the present case, no proceedings under Section 61 were undertaken, and no opportunity was given to the petitioner to explain the discrepancies by issuance of GST ASMT-10. (p28)
• Therefore, the issuance of the show cause notice under Section 73, without following the mandatory procedure under Section 61, was without jurisdiction. (p28)

C. Reliance on Rajasthan High Court Judgment and Supreme Court Affirmation

• The Court discussed the Rajasthan High Court’s decision in Joint Commissioner v. Goverdhandham Estate Pvt. Ltd., where it was held that the procedure under Section 61 is mandatory before invoking Section 73 based on discrepancies in returns. (p29–30)
• The Supreme Court dismissed the SLP against this judgment, thus affirming the Rajasthan High Court’s view. (p31–32)
• The Court found the facts of the present case identical to those in the Rajasthan High Court case, and thus the same principle applied. (p33)

D. Optional Nature of Table 14 of GSTR-9C and Binding Nature of Notifications

• The Court examined the notifications and instructions issued by the competent authority, which made submission of information in Table 14 of GSTR-9C optional for FY 2017-18 to 2022-23. (p35–36)
• The revenue did not dispute the position that Table 14 was optional for the relevant period. (p36)
• The Court reiterated that departmental circulars and notifications are binding on the revenue authorities, citing Commr. Of Customs v. Indian Oil Corpn. Ltd. and other Supreme Court precedents. (p37)
• Accordingly, the petitioner’s non-furnishing of Table 14, being optional, could not constitute a discrepancy or error. (p38)

E. Limitation and Bar to Further Proceedings

• The Court noted that, in view of the affirmed Rajasthan High Court judgment, the revenue cannot now invoke Section 61 as the same would be barred by limitation. (p43)

F. Maintainability of Writ Petition Despite Alternative Remedy

• The Court rejected the revenue’s objection regarding the availability of an alternative statutory remedy, holding that where jurisdiction is challenged as unauthorized and contrary to statute, the writ petition is maintainable under Article 226. (p40–41)

G. Other Contentions and Final Findings

• The Court found no merit in the revenue’s contention that furnishing Table 14 was mandatory, as no supporting material was produced, and the issue was already covered by the Rajasthan High Court judgment. (p42)
• The Court held that the invocation of jurisdiction under Section 73, without following the mandatory procedure under Section 61 read with Rule 99, is contrary to the scheme of the Act and unauthorized. All further actions taken thereunder are contrary to law. (p39)
• The writ petition was allowed, the impugned show cause notice set aside, and interim orders merged. (p44–45)

Conclusion

The Court concluded that the impugned show cause notice issued under Section 73(1) of the CGST Act, 2017, was without jurisdiction, as the mandatory procedure under Section 61 read with Rule 99 was not followed, and the alleged discrepancy was based on non-furnishing of information in Table 14 of GSTR-9C, which was optional per binding notifications. The writ petition was allowed, and the show cause notice set aside.

Disposition

The writ petition is allowed; the impugned show cause notice dated 05.09.2023 is set aside; interim orders, if any, stand merged; pending interlocutory applications, if any, are disposed of.

Source: Pepsico India Holdings Pvt. Ltd. v. Union of India and Ors., (2025) taxcode.in 679 HC