Guwahati: The Gauhati High Court has struck down a ₹19.5 crore show cause notice (SCN) issued to PepsiCo India Holdings Pvt. Ltd., holding that the Goods and Services Tax (GST) department failed to comply with mandatory procedural requirements under the Central Goods and Services Tax (CGST) Act. The ruling was delivered by Justice Soumitra Saikia in a single-judge bench.
According to a report by LiveLaw on Saturday, October 11, the notice dated September 5, 2023, accused PepsiCo of wrongly availing Input Tax Credit (ITC) worth ₹19,51,41,111 for the financial year 2017–18. The department’s claim was based on a perceived mismatch between ITC reported in Form GSTR-9C and the company’s audited financial statements, particularly entries under Table 14 of the form.
PepsiCo argued that filling in Table 14 was optional for the said year, citing official notifications to that effect. The company further contended that the department had bypassed a crucial procedural requirement — the issuance of a notice in Form GST ASMT-10 under Section 61 read with Rule 99 — which must precede any demand action under Section 73 of the CGST Act.
Appearing for PepsiCo, Senior Advocate R. Shah emphasized that without the preliminary scrutiny under Section 61, the tax department lacked authority to raise a demand. He also pointed out that the limitation period for FY 2017–18 had expired on September 30, 2023, rendering the notice invalid.
Upholding these arguments, the court observed that the statute clearly provides an opportunity for taxpayers to rectify discrepancies before formal proceedings are initiated. “Where the statute itself prescribes a procedure enabling the registered taxpayer to rectify any defects, there arises no occasion to invoke proceedings under Section 73,” Justice Saikia noted in the judgment.
The bench further ruled that even if Table 14 were considered mandatory, the GST department was still obligated to follow the prescribed scrutiny process under Section 61 before issuing a show cause notice. The court also dismissed the department’s claim that PepsiCo had an alternate remedy, citing judicial precedents affirming writ jurisdiction in cases of procedural violations.
Consequently, the Gauhati High Court set aside the ₹19.5 crore notice, reaffirming the principle that tax authorities must adhere strictly to statutory procedures before invoking coercive measures under GST law.
