Section 73 Demand From Return Scrutiny Invalid Without ASMT‑10 Notice: Gauhati High Court

The Gauhati High Court set aside a GST demand built on scrutiny of the annual return because the discrepancies were never first communicated in Form GST ASMT‑10 under Section 61.

The Gauhati High Court has held that where a demand under Section 73 of the Assam Goods and Services Tax Act, 2017 (AGST Act) is founded on discrepancies found on scrutiny of returns, the officer must first communicate them in Form GST ASMT‑10 under Section 61 read with Rule 99, and cannot proceed straight to a show cause notice [R Ess Iron and Steel Pvt Ltd v. Union of India & Ors., 2026-juristway.com-3413-HC(Gauhati)-GST].

Justice Arun Dev Choudhury heard the petition against a notice in Form GST DRC‑01 dated 9 Jan 2024 and an order dated 30 Apr 2024 for 2018‑19. The notice recorded that the demand was worked out by examining the annual return and comparing it with other returns, e‑way bills and departmental records. No ASMT‑10 notice was issued, and the company’s request for a personal hearing in its reply of 9 Feb 2024 was not granted.

Section 61 lets the proper officer scrutinise returns, inform the taxpayer of discrepancies and seek an explanation; if the explanation is accepted, no further action follows. The State, which filed no affidavit despite several opportunities, argued that the company had participated in the Section 73 proceedings and had an appeal remedy.

Following a coordinate Bench in PepsiCo India Holdings Pvt. Ltd. v. Union of India (WPC No. 6960/2023), the Court held that communicating discrepancies in ASMT‑10 “is not an empty formality”. A proper officer may act under Section 73 on independently available material, but “the source and foundation of the proposed demand” decides whether the Section 61 procedure applies.

The company’s reply to the notice could not substitute for compliance with Section 61 or be treated as a waiver of a statutory safeguard. An appeal remedy also did not bar writ review where proceedings were initiated in disregard of the governing procedure.

The notice and the order were set aside, with liberty to proceed in accordance with law, subject to limitation. The Court did not examine the merits of the alleged under‑declaration.

2026-juristway.com-3413-HC(Gauhati)-GST