GST S. 75(12) Not Invokable Once Self-Assessed Tax as per S. 37 Included in Return furnished u/s 39: Calcutta HC [Read Order]

The Calcutta High Court held that once the self-assessed tax as per Section 37 of the Goods and Services Tax (GST) Act is included in the return furnished under Section 39, the provisions of GST Section 75(12) cannot be invoked for recovery.

The petitioner, Kuddus Ali, Proprietor of M/s. Kuddus Ali Construction was issued a notice in Form ASMT-10 on September 20, 2024, identifying discrepancies in the GST returns filed for the financial year 2020-21, including a short payment of Rs. 8,09,248/-. The petitioner responded to the notice, clarifying that an incorrect figure was disclosed in Table 4N of GSTR-9, and explained the delayed filing of GSTR-3B returns, accepting liability for interest and seeking installment-based payment.

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Despite this, the GST department raised a demand through Form DRC-07, contending that the liability was admitted and therefore directly recoverable under Section 75(12), which permits recovery of self-assessed tax included in the return under GST Section 39 without issuing a show cause notice. The petitioner’s counsel, Mr. Kanodia, argued that such recovery bypassed the procedural safeguards under Sections 73 and 74 of the Act and was contrary to law.

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The Court considered the scope of Section 75(12) and the explanation therein, which defines “self-assessed tax” as including only that which is disclosed under Section 37 but not included in the return under Section 39.

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Since, in the present case, the tax amount had been disclosed and included in the return under Section 39 (Form GSTR-3B), the Court held that Section 75(12) was not applicable. The Court also stated that where discrepancies are noticed during scrutiny, the proper course under the scheme of the Act is to proceed under Sections 61, 65, 66, 67, 73, or 74, after giving the assessee an opportunity of hearing.

The bench observed that “In my view, once, the self-assessed tax as per Section 37 is included in the return furnished under Section 39 of the said Act, Section 75(12) of the said Act can no longer be invoked.”

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Justice Raja Basu Chowdhury rejected the respondents' argument that the absence of a show cause notice was not fatal due to the taxpayer’s “admission” in response to ASMT-10. It held that any recovery under the Act must be preceded by due process, including issuance of a notice and an opportunity to be heard, especially where the tax has been duly included in the return under Section 39.

Accordingly, the order was set aside, and the DRC-07 demand was quashed.

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To Read the full text of the Order CLICK HERE

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