Early Judicial Signal on Section 74A: Madras HC decides S. 74 Order issued for FY 2024-25 [Read Order]

The Madurai Bench of the Madras High Court held that for Financial Year 2024-25 onwards, proceedings must be initiated under Section 74A and not under the erstwhile Sections 73 or 74.

Baskar Selvakumar, proprietor of M/s Vettri Vinayagar Electrical Works, filed a writ petition against the order issued under Section 74 of GST Act for the FY 2024-25.

The petitioner contended that the Sections 73 and 74 omitted with effect from 01.04.2024, and that the new consolidated provision Section 74A alone governs demand proceedings for FY 2024-25 onwards.

Despite this, the department had issued the show cause notice under Section 74 and proceeded to pass the assessment order, later trying to rectify it under Section 161, said the petitioner’s counsel Adv. Renganathan S.

The petitioner argued that once the foundational provision itself was wrongly invoked, the entire exercise suffered from lack of jurisdiction and could not be cured through a rectification order passed without granting proper opportunity.

The department conceded with the submissions. The department counsel submitted that they issued notice and order under the wrong Section.

Justice Krishnan Ramasamy examined the validity of a show cause notice and subsequent assessment order issued under Section 74 of the CGST Act for FY 2024-25.

The bench, instead of quashing the entire proceedings, quashed the impugned rectification order and directed the petitioner to treat the Section 74 order as notice to Section 74A. It granted the petition 4 weeks time to file a reply with supporting documents.

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