[vide order dated 16.07.2024 , in Mandarina Apartment Owners Welfare Association v. Commercial Tax Officer/State Tax Officer, from W.P. Nos. 15307 & 15330 of 2024]
When is ASMT-10 compulsory? Upon fulfilment of two conditions: (i) selection of returns for scrutiny; and (ii) the discovery of discrepancies on such scrutiny; there is an obligation on the proper officer to issue a notice in Form GST ASMT-10 for scrutiny of returns. The purpose of such scrutiny notice is: (i) to enable the registered person to explain or accept the discrepancy and pay tax and interest and thereby avoid a penalty; and (ii) if the explanation is not satisfactory or corrective measures are not taken, action may be initiated under Sections 65, 66 or 67 of the CGST Act, or determine the tax and other dues under Sections 73 or 74 ibid.
Is ASMT-10 a pre-requisite for SCN? Unlike Section 60 ibid (provisional assessment) or Section 62 ibid (best judgment assessment of non-filers) or Section 63 ibid (assessment of unregistered persons) or Section 64 ibid (summary assessment), no assessment / reassessment / adjudication is undertaken under Section 61 ibid. Therefore, the consequence of not issuing a scrutiny notice, in spite of noticing discrepancies after selecting and scrutinizing returns, would be that it vitiates the scrutiny process, including the discrepancies noticed thereby and the quantification, if any, done in course thereof.
As interpreted by the Andhra Pradesh High Court in Devi Traders v. State of Andhra Pradesh, the use of the words "where it appears to the proper officer" in Sections 73 or 74 ibid indicates that adjudication may be initiated not only as a consequence of scrutiny under Section 61 ibid, audit under Section 65 ibid, special audit under Section 66 ibid or inspection under Section 67 ibid, but also upon receipt of information from other sources. On closely examining both Sections 61 and 73 ibid, there is no indication in either provision that scrutiny of returns and the issuance of Form GST ASMT-10 constitute a mandatory pre-requisite for issue of show cause notice (SCN) under Sections 73 or 74 ibid.
The decision of the High Court of Madras in Vadivel Pyrotech (P.) Ltd. v. Asstt. Commissioner (ST) is distinguishable since notice in Form GST ASMT-10 was issued in that case and was replied to. Thereafter, the adjudication covered discrepancies not covered in the earlier ASMT-10 notice and the learned AGP agreed to issue a notice in Form ASMT-10 before proceeding further.