Case Summary
Case Title: M/s. Sri Shakthi Communications v. Assistant Commissioner of State Taxes & Ors.
Court: High Court of Andhra Pradesh, Amaravati
Petition No.: W.P. No. 8150 of 2025
Date of Judgment: 02.07.2025
Category of Dispute: Input Tax Credit (ITC) & Procedural Validity of Assessment
Relevant Sections:
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Section 73(1), 73(10), and 50 of the CGST Act, 2017
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Rule 142(1A) of the CGST Rules, 2017
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Article 226 of the Constitution of India
Facts (Paras 1–3)
The petitioner, engaged in the sale and marketing of cell phones, was a registered dealer under GST. Its registration was cancelled on 20.07.2023 for failure to furnish returns for six months. Parallelly, proceedings under Section 73 were initiated by the Assistant Commissioner through a show cause notice dated 01.07.2023, proposing reversal of ITC along with interest and penalty. Subsequently, by order dated 28.12.2023, a demand of ₹1,95,36,841/- in tax, ₹2,01,07,423/- in interest under Section 50, and penalty of ₹19,53,684/- under Section 73(1) was confirmed.
Questions/Dispute (Para 4)
The writ petition challenged the demand order on the following grounds:
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Non-issuance of mandatory intimation in Form DRC-01A under Rule 142(1A).
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Demand was barred by limitation under Sections 73(10) and 70(2).
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Violation of natural justice due to lack of adequate opportunity.
Observations (Paras 5–6)
The Court noted earlier judgments, including New Morning Star Travels v. Deputy Commissioner (2023) and W.P. No. 35710 of 2022, where it was consistently held that non-issuance of Form DRC-01A prior to initiation of assessment invalidates proceedings. It was undisputed by the Revenue that no such notice had been issued to the petitioner.
Judgment (Paras 7–8)
The Court held that the absence of DRC-01A notice vitiated the assessment proceedings. Accordingly, the demand order dated 28.12.2023 was quashed. The matter was remanded back to the Assessing Authority to conduct a fresh assessment strictly following the prescribed procedure. Importantly, the Court directed that the limitation period would exclude the time between the impugned order and the present judgment. No costs were awarded.
Case Law References
| Case Referred | Citation | Verdict |
|---|---|---|
| New Morning Star Travels v. Deputy Commissioner | 2023 (12 Centax 198, AP) | Held that failure to issue DRC-01A prior to amendment of Rule 142(1A) (15.10.2020) renders assessment proceedings invalid |
| W.P. No. 35710 of 2022 (AP HC) | Judgment dated 12.02.2025 | Quashed demand order for non-issuance of DRC-01A |
| W.P. No. 3480 of 2021 and batch (AP HC) | Judgment dated 05.03.2025 | Reinforced requirement of DRC-01A as a mandatory pre-condition |
Between Fine Lines
For businesses, this judgment underscores the absolute necessity of issuance of Form DRC-01A before initiating assessment proceedings under Section 73. Any demand raised without this procedural compliance is legally unsustainable. Taxpayers can contest such demands effectively, especially for pre-2020 periods.
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