Punjab and Haryana HC sets aside S. 74 GST Demand Notice and Order issued after Dropping S.61 Actions

The Punjab and Haryana High Court set aside a GST demand notice and order issued under Section 74 of the Central Goods and Services Tax Act, 2017, after proceedings under Section 61 were dropped. The case involved JSB Trading, accused of wrongly claiming Input Tax Credit (ITC) for FY 2017-18. After the firm’s satisfactory reply, the Proper Officer closed the Section 61 proceedings. However, a demand notice under Section 74(5) and a show-cause notice under Section 74(1) were later issued, followed by a penalty and interest imposition. The court ruled that initiating Section 74 proceedings after closing Section 61 proceedings was improper and violated principles of natural justice, as no personal hearing was granted. This decision reinforces the need for consistency and fairness in GST adjudication processes.