Facts of the Case:

In this case, a scrutiny notice under Section 61 of the DGST Act was issued to the petitioner on 06.02.2021 pointing out discrepancies between (i) ITC in GSTR-2A, (ii) ITC claimed in GSTR-3B, and (iii) outward tax liability in GSTR-1. A reminder was issued on 29.03.2021, calling for extensive supporting documents including invoices, e-way bills, stock records, balance sheets, bank statements, and party-wise ledgers.

The petitioner furnished a detailed reply on 14.09.2021 along with all relevant documents. Upon scrutiny, the proper officer found the explanation satisfactory and closed the matter vide FORM GST ASMT-12 dated 26.04.2023, recording that “the reply filed by the dealer seems to be satisfactory”.

However, despite the closure of scrutiny, the department issued a fresh SCN in Form DRC-01 under Section 73 on 29.05.2024, based on the very same discrepancies, and thereafter passed the impugned demand order dated 28.08.2024, raising a demand.

The petitioner challenged the SCN and demand order on the ground that reopening the same issues already accepted under Section 61 was without jurisdiction.

Issue:

Whether the department can initiate fresh proceedings under Section 73 of the DGST Act on the same discrepancies after the taxpayer’s explanation has already been accepted and proceedings closed through ASMT-12 under Section 61(2) of the Act.

Held that:

The Court examined Section 61(2) and concluded that once the explanation offered by the taxpayer is accepted under Section 61(2) and formal closure is made through ASMT-12, no further proceedings on the same grounds can be initiated. The phrase “no further action shall be taken” includes initiation of proceedings under Sections 73 or 74. The term “no further action” includes proceedings under Section 73.

Further, held that Section 73 contains no non-obstante clause and therefore does not override the statutory bar created by Section 61(2). Proceedings under Section 73 must be based on independent grounds, not on issues already accepted upon scrutiny. Issuance of the SCN dated 29.05.2024 and the consequential order dated 28.08.2024 on the same discrepancies previously accepted was held to be without jurisdiction and contrary to the statutory scheme.

The Court relied upon Goverdhandham Estate Pvt. Ltd. v. State of Rajasthan case, wherein held that once explanation is accepted under Section 61, no further proceedings can be drawn. Also, on case Radiant Cash Management Services Ltd. v. AC, wherein held that ASMT-12 precludes revival of the same demand through Section 73.

Both the impugned SCN and the demand order were set aside as without authority of law.

The Delhi High Court reaffirmed that Section 61(2) creates a statutory bar on reopening already accepted explanations. Once ASMT-12 is issued, the same discrepancies cannot form the basis of a Section 73 demand.

Case Name: Kemexel Ecommerce Pvt. Ltd. Versus Sales Tax Officer Class II/Avato Ward 105, Zone 4, Delhi. dated 31.10.2025

To read the complete judgement 2025 Taxo.online 2907