In a recent decision, the Madras High Court addressed a case involving the petitioner, Periyasamy Karthikeyan, against the State Tax Officer, Karur-4 Assessment Circle, concerning a clerical error in the classification of Input Tax Credit (ITC) for the fiscal year 2018–19. The petitioner had mistakenly availed ITC under CGST and SGST instead of IGST while filing GSTR-3B returns. This error was later rectified in the annual return and reconciliation statement through GSTR-9 and GSTR-9C, with a Chartered Accountant's certification.
Initially, the respondent initiated scrutiny proceedings by issuing ASMT-10. After reviewing the petitioner's reply, these proceedings were concluded with the issuance of ASMT-12 under Section 61(2) of the CGST Act. Despite this resolution, the respondent initiated further proceedings by issuing DRC-01A and DRC-01 on the same issue, leading to an assessment order.
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The key issue was whether further proceedings were permissible after the issuance of ASMT-12. The High Court ruled that once ASMT-12 is issued, Section 61(2) of the CGST Act prohibits any further proceedings on the same matter. The issuance of DRC-01A and DRC-01 post-scrutiny was deemed beyond jurisdiction and against the GST Act's framework. The court noted that the misclassification was fully rectified and did not result in revenue loss, as no ineligible credit was availed. Consequently, the assessment order dated 09.12.2024 was quashed, and the writ petition was allowed.
Parties: Periyasamy Karthikeyan v. State Tax Officer, Karur-4 Assessment Circle
Order Date: 06 January 2026
Facts –
- The petitioner had wrongly availed Input Tax Credit for FY 2018–19 under CGST and SGST instead of IGST due to a clerical error while filing GSTR-3B returns.
- The error was duly disclosed and rectified in the annual return and reconciliation statement by filing GSTR-9 and GSTR-9C, supported by a Chartered Accountant’s certification.
- The respondent initiated scrutiny proceedings by issuing ASMT-10, and after considering the petitioner’s reply, dropped the proceedings by issuing ASMT-12 under Section 61(2) of the CGST Act.
- Despite closure of scrutiny, the respondent again initiated proceedings by issuing DRC-01A and DRC-01 on the very same issue and passed the impugned assessment order.
Issue –
- Whether issuance of DRC-01A, DRC-01 and passing of an assessment order is permissible after scrutiny proceedings were concluded by issuance of ASMT-12 under Section 61(2) of the CGST Act?
Order –
- The High Court held that once the explanation offered by the taxpayer is accepted and ASMT-12 is issued, Section 61(2) creates a statutory bar against initiating further proceedings on the same issue.
- It was observed that issuance of DRC-01A and DRC-01 after closure of scrutiny proceedings was without jurisdiction and contrary to the scheme of the GST Act.
- The Court held that mere misclassification of ITC between CGST/SGST and IGST heads, when fully rectified through GSTR-9 and GSTR-9C, does not result in revenue loss.
- The contention of the department regarding excess utilisation and revenue loss was rejected, as the ITC was available with the Government and no ineligible credit was availed.
- Accordingly, the impugned assessment order dated 09.12.2024 was quashed in entirety, and the writ petition was allowed.
