Dropping registration-cancellation proceedings does not bar subsequent Section 74 adjudication proceedings.

The petitioner, proprietor of M/s Rhino Metals, challenged the Demand-cum-Show Cause Notice dated 04.10.2025 issued by the Assistant Commissioner of State Tax under Section 74 of the Assam Goods and Services Tax Act, 2017 (“AGST Act”) for the financial year 2024–25.

The petitioner contended that proceedings under Section 74 could not be initiated because earlier proceedings for cancellation of his GST registration had been dropped by order dated 09.05.2025 after consideration of his reply.

During the hearing, the petitioner alternatively sought permission to file a reply to the notice, stating that he had not received appropriate legal advice.

The State submitted that no adjudication order had yet been passed pursuant to the impugned notice.

Whether the dropping of earlier cancellation proceedings against the petitioner’s GST registration barred the initiation of separate proceedings under Section 74 of the AGST Act for tax non-payment, short payment, erroneous refund, or wrongful availment/utilisation of input tax credit by reason of fraud, wilful misstatement, or suppression of facts?

Whether the petitioner should be granted an opportunity to file a reply to the Demand-cum-Show Cause Notice dated 04.10.2025, and whether the intervening period should be excluded for limitation purposes?

The Court applied Section 74 of the Assam Goods and Services Tax Act, 2017, which empowers the proper officer to initiate adjudicatory proceedings concerning tax not paid or short paid, tax erroneously refunded, or input tax credit wrongly availed or utilised by reason of fraud, wilful misstatement, or suppression of facts to evade tax.

The Court held that proceedings for cancellation of GST registration operate in a distinct field and are legally separate from proceedings for adjudication of tax liability under Section 74; therefore, the dropping of cancellation proceedings does not, by itself, preclude subsequent Section 74 proceedings.

The Court rejected the petitioner’s foundational argument because cancellation of registration and adjudication of tax liability under Section 74 address different legal questions and consequences.

The fact that the earlier cancellation proceedings had been dropped did not prevent the tax authorities from issuing a separate notice alleging tax liability falling within Section 74.

However, since no final order had been passed pursuant to the notice, and in the interests of justice, the Court permitted the petitioner to submit a substantive reply raising all contentions available in law.

To preserve the petitioner’s opportunity and account for the period during which the matter was before the Court, the Court directed that the period from 05.10.2025 until 04.08.2026 be excluded while calculating the limitation period for passing the adjudication order.

Nevertheless, the petitioner was granted 30 days from 04.08.2026 to file a reply to the notice and raise all permissible legal and factual contentions.

The period from 05.10.2025 to 04.08.2026 was directed to be excluded for computing the limitation period for passing the adjudication order under Section 74.

The writ petition was accordingly disposed of.