Calcutta HC Upholds Separate GST Notices for Same Period If Grounds Differ

The Calcutta High Court has ruled that the GST (Goods and Services Tax) authorities are allowed to issue separate notices under Sections 73 and 74 of the CGST/WBGST Act for the same tax period, given the basis of each notice is not same, however, it quashed the notice which raised the issued which already dealt in S. 74.

Sayan Biswas, a registered dealer in ferrous scrap, has submitted a writ petition contesting the validity of the section 73 notice issued after proceedings u/s 74 had earlier culminated in an order and appellate rejection.

Justice Raja Basu Chowdhury, after noting Sections 73 and 74, cited that “I am of the view that the respondents cannot be faulted for having issued two separate notices in respect of the selfsame period, since the basis for issuance of notices is different.”

Read Also: Calcutta HC Upholds GSTIN Cancellation Over Non-Response to GST Notice and Lack of Business Presence

The applicant argued that the second notice, which covers the same tax period, raises a double issue and is therefore not allowable.

The same argument has been denied by Justice Raja Basu Chowdhury, who said that while both sections are concerned with tax shortfalls, the legal foundations of the two are different materially.

Section 73 addresses the issues emerging from reasons beyond fraud or suppression, whereas Section 74 applies when there is alleged fraud, wilful misstatement, or suppression of facts to evade tax, the court mentioned. Therefore, u/s 73, a notice can validly coexist with a prior section 74 proceeding, provided the grounds differ.

The Section 73 SCN has been questioned by the applicant because it was vague, particularly related to the reverse charge mechanism and ITC-related disclosures. The vagueness appeal has been rejected by the court, keeping that the notice was issued in Form DRC-01 in compliance with the GST rules and secured references to GSTR-1 tables, along with the information for HSN codes and reverse charge liabilities.

The claim of the applicant has been accepted partially by the court for the inclusion of problems already adjudicated under the earlier section 74 proceedings, those concerning ITC taken on inward B2B supply recorded in Table 4(A)(5) of GSTR-3B.

With the applicant, the court was not satisfied that the challenge to the appellate order u/s 107 cannot be mounted due to the non-constitution of the Appellate Tribunal. Applicant, without pursuing available statutory remedies, invoked writ jurisdiction and could not now take advantage of that omission.

Consequently, the High Court merely quashed the part of the section 73 notice that overlapped with problems already adjudicated u/s 74 and kept the rest. On 19 July 2024, the demand raised in Form DRC-07 was set aside with directions to the authorities to issue a revised demand showing the court’s order.