The Madras High Court has held that the DRC-01 notice beneath Section 74(1) of the CGST Act should be given prior to passing the assessment order.
Justice R. Suresh Kumar remitted the case to the respondent/department for further consideration and directed the department to issue a DRC-01 notice to the petitioner and important orders would be passed towards assessment.
If any assessee needs to furnish the tax, interest, and penalty under sub-section (1) of section 73 or 74 of the CGST Act then the authorized officer must tell the tax information, penalty, and interest discovered in Form GST DRC-01A to the taxpayer.
The applicant an only proprietary, has been involved in the business of iron and steel scrap. The applicant has regularly furnished the returns beneath GST.
A communication in Form No. DRC-01A was allocated to the applicant imposing that some of the suppliers who has provide the iron and steel scrap to the applicant were either non-existent or were not doing any business, hence the applicant has wrongly claimed the ITC. The applicant answered the notice by not accepting the proposal.
Under Section 75(1) of the Act, the council passes an order. The assessment has been created in which not exclusively the ITC reversal under Section 74 of the CGST Act, but also the penalty has been implemented. The assessment order has passed with the compliances that the electronically generated summary of the order mentioning the ITC reversal, penalty, and interest is subjected to pay via applicant was also electronically uploaded inside the common portal.
The court sees that what has been asked by the revenue will get intimated through the method of notice beneath sub Section 5 of Section 74 of the CGST Act, firstly to taxpayers, who on receipt of that might or might not accept and once he accepted there will be a conclusion. But if the applicant does not accept the proposal given via GST revenue beneath section 74(5) of the act, the subsequent action is to provide the notice under Section 74(1) of the Act.
The court clarified that a section 74(1) notice is an independent notice to be allocated in DRC-01, while the notice under Section 74(5) was to be given in DRC-01A.
