Section 61 scrutiny is not mandatory before proceedings founded on a Section 67 investigation.

The petitioner, a partnership firm conducting business as “Detailing Bull,” challenged a demand-cum-show-cause notice dated 14 August 2025 issued by the Assistant Director, DGGI, Guwahati, concerning financial years 2021–22 to 2024–25, as well as the search and seizure proceedings initiated under Section 67 of the Central Goods and Services Tax Act, 2017 (“CGST Act”) on 1 February 2024.

The search was conducted pursuant to FORM GST INS-01, followed by FORM GST INS-02 and preparation of a panchnama.

During investigation, the authorities examined the petitioner’s “Garage Plug” software, slip pads, sales records and other documents, recorded statements, and obtained information from third parties.

The show-cause notice alleged suppression and misdeclaration of taxable supplies valued at ₹3,42,61,665, involving GST of ₹61,67,100, for financial years 2021–22 to 2023–24 under Section 74, and invoked Section 74A for financial year 2024–25.

Interest and penalties, including penalties under Section 122, were also proposed. The notice took account of ₹3,00,000 paid by the petitioner through DRC-03.

Whether the search conducted under Section 67 of the CGST Act was invalid for want of proper authorization or contemporaneous “reasons to believe”.

Whether the search authorization and consequential communications were invalid for non-compliance with the mandatory DIN requirements under the relevant CBIC circulars.

Whether proceedings under Section 74 or Section 74A could be initiated without first undertaking scrutiny under Section 61 and issuing FORM GST ASMT-10.

Whether a consolidated show-cause notice covering multiple financial years was without jurisdiction.

Whether the simultaneous proposal of proceedings under Sections 74/74A and Section 122 violated Section 75(13) of the CGST Act.

Whether the show-cause notice was liable to be quashed for failing to establish suppression, fraud, wilful misstatement, or correct quantification of the alleged taxable turnover at the notice stage.

The Court applied Section 67(2) of the CGST Act, which permits a proper officer, upon having reasons to believe that the statutory circumstances exist, to authorize a search in writing; Rule 139(1) prescribes FORM GST INS-01 for such authorization.

The Court held that the existence of reasons to believe and the requirement of written authorization are distinct, and that prior disclosure of the reasons to the taxable person is not ordinarily required, although the reasons must have existed contemporaneously before authorization.

CBIC Circular Nos. 122/41/2019-GST and 128/47/2019-GST concerning DIN requirements and permissible exceptions/regularization were also applicable.

Section 61 and Rule 99 govern scrutiny-based discrepancies, but Section 61 is not a mandatory preliminary stage for every investigation founded on search and seizure under Section 67.

The Court relied on M/s Tata Projects Ltd. v. Union of India, 2026 SCC OnLine Gau 3798, for the proposition that a consolidated show-cause notice covering multiple financial years is not, by that fact alone, without jurisdiction.

Section 75(13) prohibits the imposition of more than one penalty for the same act or omission, but does not prevent the Department from referring to Sections 74/74A and 122 in the same notice.

Factual questions concerning suppression, fraud, wilful misstatement, evidentiary reliability, and quantification are ordinarily matters for statutory adjudication rather than writ review of a show-cause notice.

The Court rejected the challenge to the search authorization because the petitioner itself acknowledged the existence of FORM GST INS-01 dated 1 February 2024; therefore, the authorization could not be treated as void ab initio merely because the reasons to believe had not been supplied to the petitioner.

However, the adjudicating authority was directed, in substance, to examine the original authorization and contemporaneous departmental records to determine whether the requisite belief had actually been formed before issuance of INS-01.

The DIN objection involved factual questions concerning the presence of DIN, applicability of exceptions, and subsequent regularization, and therefore did not justify quashing the entire notice at the writ stage.

Since the notice was founded on the search, seized material, statements, software entries, slip pads, and information obtained during investigation, rather than merely on return scrutiny, the absence of proceedings under Section 61 did not invalidate it.

The consolidated notice was also not inherently without jurisdiction, although liability had to be separately determined for each financial year, with the applicable provisions, limitation requirements, and statutory ingredients independently examined.

Similarly, the reference to Sections 74/74A and 122 did not itself violate Section 75(13); the adjudicating authority remained bound to prevent double penalty for the same act or omission.

Finally, the allegations of suppression and the correctness of quantification depended on evaluation of records, statements, explanations, reconciliations, and other evidence, which could not properly be undertaken in writ proceedings against a show-cause notice.

However, in the interests of justice, the petitioner was granted liberty to submit its reply and raise all factual and legal objections before the adjudicating authority within 45 days from 3 September 2026.

The authority was required to adjudicate the matter in accordance with law, including separately determining liability for each financial year, examining the validity of the authorization and relevant records, applying the correct statutory provisions and limitation rules, and ensuring compliance with Section 75(13).

The Court clarified that its observations were confined to the question of interference with the show-cause notice and did not constitute findings on the merits of the allegations.

Parties were directed to bear their own costs.