2026-VIL-06-GSTAT-DEL-PB
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  2. 2026-VIL-06-GSTAT-DEL-PB

SGST Tribunal

GST - Tax demand on account of mismatch between GSTR-1 and GSTR-3B returns – Respondents issued a demand order against the appellant for the financial year 2018-19, alleging a mismatch between the output tax liability declared in GSTR-1 and the tax paid in GSTR-3B - Whether the first appellate authority was correct in upholding the tax and interest demand merely on the basis of the return mismatch, without verifying the reconciliation records submitted by the appellant – HELD - The first appellate authority erred in upholding the tax and interest demand solely on the basis of the return mismatch, without properly examining the reconciliation records and documentary evidence submitted by the appellant. The appellant had disclosed the relevant transactions in its books of account and GSTR-3B filings, but due to technical and timing constraints, could not amend the earlier GSTR-1 returns. The first appellate authority had accepted that the appellant did not have any fraudulent intent, but still upheld the demand on the ground of non-reconciliation in the annual returns - The appellant should be given a reasonable opportunity to amend the returns and provide the necessary reconciliation, as the issue was primarily a reconciliatory one and did not involve any suppression or fraud - The orders of the proper officer and the first appellate authority are set aside and the matter is remanded back to the proper officer for re-consideration, allowing the appellant to file suitable amendment petitions within one month and providing a reasonable opportunity of hearing – Ordered accordingly - Applicability of Section 74 vs. Section 73 of the CGST Act, 2017 - Whether the first appellate authority was correct in converting the proceedings from Section 74 (dealing with cases of fraud, suppression, etc.) to Section 73 (dealing with cases of short payment) of the CGST Act – HELD - The first appellate authority had rightly held that the case did not involve any fraudulent intent or suppression of facts by the appellant to evade tax, and hence, the proceedings under Section 74 were not maintainable. However, the first appellate authority erred in converting the proceedings to Section 73 suo motu, as this power is vested with the proper officer and not the appellate authority. The CBIC Circular No. 254/11/2025-GST clarified that the original Proper Officer who has issued Notice Under Section 74(1) of the CGST Act shall re-determine the tax payable by the Assessee and it cannot be done by the First Appellate Authority or the Tribunal. The natural corollary would be that in case First Appellate Authority or the Tribunal comes to the conclusion that the proceeding initiated under Section 74 (1) of the CGST Act is not maintainable because of lack of requirements to attract the provision and comes to the conclusion that this is a matter to be considered under Section 73 of the CGST Act, then the matter has to be remitted back to the learned Proper Officer for re-determining the tax to be paid along with penalty, interest, etc. - The Tribunal set aside the part of the first appellate authority's order that converted the proceedings from Section 74 to Section 73, and remanded the matter back to the proper officer for re-consideration under Section 73 of the CGST Act.
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