SCN can be issued both under Section 73 and 74 of the CGST Act

The Hon’ble Punjab & Haryana High Court in the case of Group M. Media India (P.) Ltd. v. Union of India [Civil Writ Petition No. 28974 of 2024 (O&M) dated October 24, 2024] dismissed writ petition and held that Issuance of Show Cause Notice (“SCN”) under Section 73 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) and dropping proceedings would not prevent the department from independently initiating subsequent proceedings under Section 74 of the CGST Act.

Facts:

M/s Group M Media India (P) Ltd. (“the Petitioner”) was served a SCN under Section 73 of the CGST Act. The Petitioner replied to it and the proceedings were dropped vide Order Dated February 28, 2023. With the same regard, the office of the DGGI had issued notices to the Petitioner to which the Petitioner had submitted reply.

Thereafter, the Petitioner was issued SCN under Section 74(1) of the CGST Act read with Section 20 of the IGST Act. 

The DGGI was seized with the matter, the notice under section 74 of the Act could not have been issued to the Petitioner. The SCN issued under Section 74 of the CGST Act does not reflect and point out as to what manner of concealment of tax has been done by the Petitioner. Further, as per Section 74 of the CGST Act, the SCN should point out as to what are the incriminating allegations against the Petitioner and as to how the Petitioner has attempted a fraud to evade tax, any wilful mis-statement to evade tax, or suppression of facts to evade tax. 

Hence, aggrieved by the circumstances, the Petitioner filed the present writ petition.

Issue:

Whether issuance of notice under Section 73 of the CGST Act and dropping proceedings would prevent the department from independently initiating subsequent proceedings under Section 74 of the CGST Act?

Held:

The Hon’ble Punjab & Haryana High Court Civil Writ Petition No. 28974 of 2024 (O&M) held as under: 

• Observed that, the Petitioner with regard to parallel proceedings being conducted by the DGGI and the Haryana State GST Intelligence Unit as well as Assistant Commissioner, CGST is concerned, while the Assistant Commissioner, CGST issued a letter dated March 10, 2023 to the Petitioner requesting him to deposit the tax liability, the office of the DGGI only issued notice seeking certain queries. However, none of the authorities, either of the CGST or the DGGI have proceeded or initiated proceedings under Section 74 of the CGST Act.
• Observed that, the allegations against the Petitioner are that while having availed excess to the tune of Rs.8,84,57,976/- under head IGST; Rs.23,44,08,735/- in CGST and Rs.23,43,95,663/- under SGST, same is not appearing in FORM GSTR- 2A which reflects that the taxpayer has not deposited the tax liability in the Government treasury and has availed the same wrongfully. Resultantly, the notice has been issued to the Petitioner.
• Noted that,the Petitioner, however, instead of filing reply to the SCN, directly approached this Court assailing the SCN in the writ petition. The proceedings under Section 74 of the CGST Act are comprehensively and completely laid down under the provisions of the CGST Act, and Court would not in any manner cause hindrance in the disposal of the proceedings. Hence, the writ petition was dismissed.

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