1. Case Title:

M/s. Sri Ram Stone Works & Others vs. State of Jharkhand & Others ​ W.P.(T) No. 5535 of 2024 and connected writ petitions ​

2. Summary of Facts:

The petitioners, mining lessees/dealers engaged in the sale of stone boulders and stone chips, challenged the issuance of GST-ASMT-10 notices under Section 61 of the Jharkhand Goods and Services Tax Act, 2017 (JGST Act). ​ The notices alleged that the petitioners sold goods at prices lower than the prevalent market price and sought explanations for discrepancies in their returns. ​ The petitioners argued that the notices were beyond the scope of Section 61, which is limited to discrepancies in returns, and not for comparing transaction values with market prices. ​

3. Key Issues:

• Primary Issue: Whether GST-ASMT-10 notices issued under Section 61 of the JGST Act, based on the comparison of transaction values with market prices, are valid and within jurisdiction. ​
• Secondary Issue: Whether the competent authority can initiate proceedings under Section 61 for discrepancies unrelated to the returns filed by the petitioners. ​

4. Decision/Outcome:

The High Court quashed the GST-ASMT-10 notices issued under Section 61 of the JGST Act, declaring them wholly without jurisdiction. ​ The court clarified that no action can be taken merely because of differences between the transaction value and the market price of goods. ​ However, the court allowed the Assessing Officer to issue fresh notices for discrepancies in returns, if any, with respect to individual petitioners. ​

5. Reasoning Behind the Decision:

• Scope of Section 61: Section 61 of the JGST Act is limited to the scrutiny of returns and related particulars to verify their correctness. ​ It does not empower the competent authority to compare transaction values with market prices unless the transactions are shown to be sham or fraudulent. ​
• Transaction Value Under Section 15: The value of supply under Section 15 of the JGST Act is the transaction value, i.e., the consideration received for the supply. ​ Selling goods at a price lower than the market price does not constitute a discrepancy under Section 61.

• Section 15 of the Central Goods and Services Tax (CGST) Act, 2017 defines the value of taxable supply as the transaction value, which is the price actually paid or payable for goods or services when the supplier and recipient are not related and the price is the sole consideration.

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• Jurisdictional Overreach: The notices issued by the Respondents exceeded the jurisdiction prescribed under Section 61, as they were based on market price comparisons rather than discrepancies in returns. ​
• Precedent: The court relied on the Division Bench decision in Nirmal Kumar Pradeep Kumar vs. State of Jharkhand & Ors. ​, which held that selling goods at concessional rates does not entitle the Revenue to assess the difference between market price and transaction value. ​

6. Impact/Implications of the Decision:

• Clarification of Section 61: The judgment reinforces the limited scope of Section 61, ensuring that scrutiny of returns is confined to discrepancies within the returns and related particulars. ​
• Protection of Business Autonomy: Businesses are entitled to set their transaction values without interference from tax authorities, provided the transactions are genuine and not fraudulent. ​
• Guidance for Tax Authorities: The decision provides clarity to tax authorities on the proper application of Section 61 and prevents jurisdictional overreach.
• Future Proceedings: The Assessing Officer retains the liberty to issue fresh notices for discrepancies in returns, ensuring compliance with the JGST Act while adhering to jurisdictional limits. ​

This judgment is a significant precedent in safeguarding taxpayers from arbitrary scrutiny and upholding the principles of the GST framework.