The Delhi High Court, Section 61(2) of the Goods and Services Tax Act, 2017 bars further action against the taxpayer, including any demand u/s 73.
Section 61 authorises the proper officer to examine the return submitted by the registered person and notify them of any discrepancies found. Sub-section (2) states that if the explanation provided by the registered person is deemed acceptable, no additional action will be taken.
A division bench of Justices Prathiba M. Singh and Shail Jain said that as Under Section 73, which is related to the determination and tax recovery, does not secure a non-obstante clause, it arrives with the purview of Section 61(2) and hence, the issuance of demand on the identical basis on which the explanation was seen acceptable earlier, would not be tenable.
It has arrived in an appeal submitted via a company contesting action u/s 73 and resulting demand of Rs. 53,46,391 for the fiscal year 2019-2020.
It was the Petitioner-company’s case that initially, a notice under section 61 of the Delhi Goods and Services Tax Act, 2017, was issued to it for alleged discrepancies concerning Input Tax Credit. A reply with related documents has been provided by the applicant; the case was closed.
Applicant argued that action under Section 73, based on the same grounds as the above notice and concerning the same transactions, is not permissible.
After that, HC perused section 61, which states that whenever any discrepancies are discovered by the proper officer, then a notice can be issued to the taxpayer and an explanation can be requested.
On the given explanation, two courses of action are available. If the explanation is not adequate and the same has not been accepted, the discrepancies are accepted.
Also Read: Issuance of SCN Under GST – Section 73(10) with Time Limits
The court said that if on these acceptances the taxpayer does not take corrective actions, then under other provisions of the act, including Section 73 and 74 of the Act, the action would be permitted.
If the explanation is found acceptable, no action can be undertaken. The court concerning this said that Section 61(2) of the Act would create a prohibition against any additional demands being raised u/s 73 of the Act, as the term ‘further action’ u/s 61(2) of the Act shall include demands u/s 73 of the Act.
“Further, Section 73 of the Act does not have a non-obstante clause. Under such circumstances, the issuance of a demand on the same ground on which the explanation was in fact found acceptable previously, would not be tenable,” the Court cited and permitted the appeal.
| Case Title | Kemexel Ecommerce Pvt. Ltd. vs. Sales Tax Officer |
| Case No. | W.p.(c) 16555/2025 |
| For Petitioner | Mr Preetam Singh |
| For Respondent | Ms Urvi Mohan |
| Delhi High Court | Read Order |
