Demand order in Form GST DRC-07 is not sustainable when order is issued in Form GST ASMT-12

Held by Hon’ble High Court of Madras

In the matter of

Radiant Cash Management Services Ltd., Vs. The Assistant Commissioner (ST) (W.P.No .2981 of 2024 and  W.M.P.Nos.3246 & 3247 of 2024)

Since commencement of Assessments under GST, there are many practical issues which are being faced by the Assessee. One of the common issues is issuance of GST ASMT-10 and DRC-01 for the same matter. There are many instances wherein a proper officer issues the GST ASMT-10 and assessee obtains the GST ASMT-12 by filing proper reply. GST authority still issues show cause notice in Form GST DRC-01 and in some cases issues the demand order as well. In this matter, a major relief is granted by Hon’ble High Court of Madra in the matter of Radiant Cash Management Services Ltd., Vs. The Assistant Commissioner (ST) (W.P.No .2981 of 2024 and  W.M.P.Nos.3246 & 3247 of 2024).

In the given case, The Petitioner received a notice in Form GST ASMT-10 for FY 2017-18. The petitioner made necessary submission and the department issued the order in Form GST AMST-12 and mentioned that proceedings are dropped upon being satisfied with the petitioner’s explanation and no further action is required. The petitioner received a show cause notice for the same financial year and same ground. The petitioner contended that since the GST Authority has already found the reply satisfactory and issued the order in Form GST ASMT-10,  therefore, demand against SCN is unsustainable.

Hon’ble High Court held that since order in form GST ASMT-12 is already issued mentioning that no further action is required therefore continuation of proceedings and issuance of order in Form GST DRC-07 is unsustainable. Therefore, Impugned assessment order is liable to be set aside. 

The precedent is discussed in detailed as follows:

1. Brief facts of the case

1. M/s Radiant Cash Management Services Ltd (“The petitioner”) is engaged in the cash logistics business and is registered under GST.
2. For the financial year 2017-2018, the petitioner received a notice in Form ASMT-10 alleging discrepancies in returns filed by the petitioner. 
3. The petitioner filed a response to the notice and the order was issued in Form GST ASMT-12 dropping the proceedings upon being satisfied with the petitioner’s explanation. 
4. However, for the same financial year, a Show Cause notice was issued in form GST DRC-01 prior to issuance of Form GST ASMT-12. 
5. The petitioner filed a response to GST DRC-01 pointing that proceedings initiated in Show Cause notice are already dropped by issuing an order in Form ASMT-12.
6. However, The Department confirmed the issued alleged in GST DRC-01 and issued the Demand order in form GST DRC-07.
7. The impugned assessment order is challenged by the petitioner before the Hon’ble High Court.

2. Contention of the Petitioner

The Petitioner contended that:

1. Amounts indicated in Form ASMT-10 are the same grounds on which demand order is issued in form GST DRC-07 towards IGST, SGST and CGST. 
2. Further, amounts mentioned in Form GST ASMT-10 tally with amounts indicated in the impugned order. 
3. Also, through Form GST ASMT-12, the GST authorities accepted the petitioner’s reply and recorded that no further action is required to be taken in that matter. 
4. Consequently, she points out that the impugned assessment order is unsustainable.

3. Contention of the Respondent

The Respondent contended that:

1. There is a difference in amount mentioned in Form GST ASMT-10 and the amounts specified in the show cause notice and confirmed in the impugned assessment order. 

4. Findings of the Hon’ble High Court

The Hon’ble High Court made following analysis:

1. The Respondent issued an order in Form GST ASMT-12 and concluded that the reply was satisfactory and no further action is required. 
2. In such situation, it is necessary to examine the impugned assessment order to verify whether the same demand was resurrected. 
3. On examining, it was found that demand relates to the same assessment period and the same amounts towards SGST, CGST and IGST. The only difference in amount is on account of interest and penalty.
4. Upon issuance of an order in Form ASMT-12 recording that no further action is required, the continuation of proceedings culminating in the impugned assessment order is undoubtedly unsustainable. 

5. Order

The Hon’ble High Court held that since order in form GST ASMT-12 is already issued mentioning that no further action is required therefore continuation of proceedings and issuance of order in Form GST DRC-07 is unsustainable. Therefore, Impugned assessment order is liable to be set aside.