ASMT-10 notice is mandatory before issuance of SCN for return mismatches
Date & Year of Judgment
19 September 2025
This judgment reinforces, at the High Court level, the mandatory nature of Section 61 compliance before invoking Section 73 in return-scrutiny based cases.
Case Reference
M/s Pepsico India Holdings Pvt. Ltd. vs. Union of India & Ors.WP(C) No. 6960/2023Before the Gauhati High Court
Similar Cases
M/s. Vadivel Pyrotech Private Limited Versus The Assistant Commissioner (ST), Circle-II, Commercial Tax Department, NGO Colony, Satchiyapuram, Sivakasi West
W. P. (MD)No. 22642 of 2022 and W. M. P. (MD)Nos. 16803 and 16804 of 2022
Madras High Court
1. Main Issue Involved
Whether a show cause notice under Section 73(1) of the CGST Act can be issued solely on the basis of discrepancies noticed in returns without first issuing Form GST ASMT-10 under Section 61 read with Rule 99.
Whether non-furnishing of details in Table 14 of GSTR-9C, which was made optional by notifications, can constitute a “discrepancy”.
Whether writ jurisdiction is maintainable despite availability of alternative remedy where jurisdictional preconditions are absent.
The Court treated issuance of ASMT-10 as a jurisdictional precondition when demand is founded exclusively on return mismatch.
2. Sections and Rules Discussed
Section 61, CGST Act (Scrutiny of Returns)
Rule 99, CGST Rules (ASMT-10 procedure)
Section 73, CGST Act (Non-fraud demand)
Section 75
Notifications:
56/2019-CT
79/2020-CT
30/2021-CT
14/2022-CT
38/2023-CT
Reliance on:
Joint Commissioner vs. Goverdhandham Estate Pvt. Ltd. (Rajasthan HC, affirmed by SC)
Godrej Sara Lee (SC – writ maintainable in jurisdictional error cases)
The Court harmonized Sections 61 and 73 to hold that scrutiny-based demands must pass through the statutory scrutiny mechanism.
3. Facts of the Case
The petitioner was issued a show cause notice under Section 73 alleging wrongful availment of ITC of approximately ₹19.51 crore for FY 2017–18, based on alleged mismatch between GSTR-9 and GSTR-9C (Table 14).
The department did not issue ASMT-10 under Section 61 prior to issuing SCN.
Table 14 of GSTR-9C, relating to reconciliation of ITC with financial statements, had been made optional for FY 2017-18 onwards through a series of notifications.
The petitioner challenged the SCN directly before the High Court.
The entire demand originated from non-furnishing of an optional reconciliation table, without prior scrutiny communication.
4. Petitioner’s Submissions
Section 61 procedure is mandatory before invoking Section 73 when discrepancy arises from returns.
No ASMT-10 was issued.
Table 14 was expressly made optional via notifications.
Circulars and notifications are binding on the department.
Limitation under Section 73(10) had already expired.
Writ is maintainable since jurisdictional error is involved.
The petitioner framed the issue as one of jurisdictional illegality, not mere procedural irregularity.
5. Department’s Submissions
Furnishing Table 14 was mandatory.
Multiple opportunities of hearing were granted.
Statutory alternative remedy available.
Section 73 can be invoked independently.
Relied on judgments distinguishing scrutiny and adjudication proceedings.
The department attempted to treat Section 61 and Section 73 as parallel, independent mechanisms.
6. Analysis and Findings of the Court
A. Section 61 as Mandatory Precursor
The Court held that:
Scrutiny of returns is governed exclusively by Section 61.
If discrepancy arises from return scrutiny, ASMT-10 must be issued.
Only upon unsatisfactory explanation can Section 73 be invoked.
No other provision provides alternative scrutiny mechanism.
B. Optional Nature of Table 14
The Court noted:
Notifications clearly made Table 14 optional from FY 2017-18 to FY 2022-23.
Revenue did not dispute existence of these notifications.
Circulars are binding on tax authorities.
C. Alternative Remedy Not a Bar
The Court relied on Supreme Court precedents holding that writ jurisdiction is maintainable where:
Jurisdictional preconditions are absent.
Action is contrary to statutory mandate.
D. Limitation
The Court observed that proceedings under Section 61 would now be barred by limitation.
The Court elevated Section 61 compliance from procedural formality to jurisdictional safeguard in scrutiny-based demands.
7. Final Judgment / Operative Directions
The show cause notice dated 05.09.2023 was set aside.
Invocation of Section 73 without following Section 61 held unauthorized.
Writ petition allowed.
No relegation to alternative remedy.
The Court granted outright quashing rather than remand, due to jurisdictional defect and limitation bar.
8. Similar / Related Judgments & Counter Judgments
Supporting Judgments
Joint Commissioner vs. Goverdhandham Estate Pvt. Ltd. – Rajasthan High Court (affirmed by SC)
Similar views emerging in scrutiny-based mismatch cases.
Counter Position
Cases where Section 73 invoked based on independent material (classification, investigation) not merely return scrutiny.
The ratio is confined to cases where demand originates exclusively from return scrutiny, not independent investigation.
9. CA BTA Insights (Professional Takeaway)
This is a highly valuable judgment for litigation strategy:
Strong ground in all GSTR mismatch-based SCNs without ASMT-10.
Particularly relevant in GSTR-9 / 9C reconciliation disputes.
Reinforces binding nature of CBIC notifications.
Useful where limitation under Section 73(10) has expired.
Effective tool in challenging SCNs issued mechanically based on portal analytics.
Pepsico fortifies the line of jurisprudence that scrutiny-based tax demands must strictly adhere to the statutory scrutiny mechanism before adjudication. Below is the copy of the judgement.