The Gauhati High Court has ruled that GST authorities cannot bypass the mandatory statutory process outlined under Section 61 of the CGST Act during return scrutiny.
The Court emphasised that failing to issue Form GST ASMT-10 before initiating tax demand proceedings renders the entire subsequent adjudication process legally unsustainable and void.
The issue arose after the tax department initiated proceedings against the taxpayer without issuing an ASMT-10 notice, which is required to communicate discrepancies observed during the scrutiny of GST returns. Instead, the authorities moved with demand-related action.
HC said that GST is fundamentally a self-assessment regime, and Section 61 delivers a particular procedure for checking the correctness of returns.
As per the same provision, if any discrepancy is determined, then the proper officer should issue an ASMT-10 notice, which permits the taxpayers a chance to explain the differences or correct the errors before any further action is taken.
The Court outlined that compliance with this regulatory process is not a mere formality. Providing ASMT-10 notice is a required safeguard that ensures taxpayers obtain a fair chance to reply before the department moves under demand provisions.
If this step is overlooked, then it leads to a breach of the principles of natural justice and the statutory framework of the CGST Act.
Read Also: Gauhati HC: GST Demand Cannot Be Based Solely on DRC-01 Summary; Proper SCN U/S 73 Mandatory
Subsequently, the HC quashed the impugned GST proceedings and held that the department may initiate fresh proceedings, provided it complies with the process under u/s 61, which includes issuing an ASMT-10 notice, where applicable.
The ruling supports that tax authorities should comply with the procedural safeguards specified under the GST law. It is also a reminder to taxpayers that scrutiny proceedings must ordinarily start with an ASMT-10 notice, allowing them to elaborate or rectify discrepancies before the case escalates into demand or adjudication proceedings.
| Case Title | M/S. PepsiCo India Holdings Pvt. Ltd. vs. The Union of India and 3 ORS |
| Case No. | Case No. : WP(C)/6960/2023 |
| For Petitioner | MRS. R Borah, MR. D Borah |
| For Respondent | DY.S.G.I. |
| Gauhati High Court | Read Order |
