AP High Court: GST Notice Under Rule 142(1)(A) Mandatory Before SCN

The Andhra Pradesh High Court stated that a tax notice under Rule 142(1)(A) of the CGST Rules must be issued before a proper GST show cause notice.

The Division Bench of Justices R. Raghunandan Rao and K Manmadha Rao was addressing a case where a notice under Rule-142(1)(A) of the CGST Rules was not issued to the assessees/petitioners, before the Orders of assessment.

The taxpayer has contested the orders of assessment before the Andhra Pradesh High Court.

It was furnished by the taxpayer that a preliminary notice under Rule-142(1)(A) of the Central Goods and Services Tax Rules, 2017 would need to be issued before a proper show-cause notice and following Order of assessment can be issued.

The said need is an obligatory need and any failure to comply with this need shall render the orders of assessment nullified.

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It was marked by the bench that Rule-142(1)(A) of the CGST Rules, was revised w.e.f 15.10.2020. Before the amendment, the Rules expressed that a notice under Rule 142 (1)(A) of the CGST Rules “shall” be issued as a preliminary step for the conduct of an assessment proceeding. The word “shall” was substituted with the word “may” by the amendment.

The bench referred to the case of M/s. New Morning Star Travels v. The Deputy Commissioner, Vijayawada [W.P.No.12850 of 2022], where it was ruled that non-issuance of Rule-142(1)(A) of the CGST Rules, for the period before the amendment, would cause the Orders of assessment to be invalid.

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Bench said that since all the assessments are before the amendment, therefore the ratio of the New Morning Star Travels (supra) shall squarely apply to these cases.

The bench in the above-said view has permitted the petition and set aside the assessment order.