The Jharkhand High Court in the case of Sri Ram Stone Works vs. State of Jharkhand vide Case No. W.P. (T) Nos. 5425, 5427, 5535, 5684, 5725, 5840, 5913, 6056, 6079, 6080, 6093, 6190 of 2024 AND 171 AND 1239 of 2025 dated 09.05.2025, has held that the merely selling goods at concessional rates or below market price does not justify invoking Section 61 or treating the difference as assessable supply value. Accordingly, the GST-ASMT-10 notices issued under Section 61 on the basis of alleged undervaluation were quashed.
Facts of the case: In this case, the petitioners are mining lessees engaged in the sale of stone boulders and stone chips. The Petitioner were issued with notices in Form GST ASMT-10 u/s 61, alleging that they had sold goods at a price lower than the prevailing market rate, and called upon them to show cause why proceedings under Section 73 or 74 should not be initiated. The Petitioners argued that scrutiny under Section 61 is limited to identifying discrepancies in returns, not price comparisons with market rates. Despite this, fresh notices were issued again citing undervaluation.
Held that: The High Court stated that the purpose of Section 61 of the CGST Act, is limited to scrutiny of returns and related particulars, and to identify and inform the taxpayer of discrepancies within the return itself. It does not empower officers to compare disclosed transaction value with “market value” of goods and issue notices on that basis. Merely selling goods at a price lower than the market value is not a discrepancy under Section 61. Transaction value under Section 15 governs the taxable value, and not the notional market value. Reliance placed upon the judgment in the case of Nirmal Kumar Pradeep Kumar v. State of Jharkhand .
The Court held that the notices issued were beyond jurisdiction as they did not point out any return-related discrepancies but relied on a price comparison exercise. Such action is wholly without jurisdiction unless the sale transactions are shown to be sham or fictitious. Therefore, quashed the notices under Section 61 to the extent they were based solely on comparison with market price.
