2026-VIL-93-GSTAT-BLR
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  2. 2026-VIL-93-GSTAT-BLR

SGST Tribunal

GST - Invocation of extended period under Section 74, Imposition of penalty for wrongful availment of ITC, Applicability of Section 74 when tax is paid prior to show cause notice, Distinction between Section 73 and Section 74 - Appellant claimed excess input tax credit resulting from mismatch between Form GSTR 3B and Form GSTR 2A which was brought to light during verification by anti-evasion wing - Appellant admitted the excess ITC and paid tax along with interest prior to issuance of SCN. Adjudicating Authority invoked extended period under Section 74 and imposed penalty equal to amount of excess ITC alongside confirming the demand. - Whether the invocation of Section 74 and imposition of penalty at 100 percent is justified when entire tax and interest was paid prior to issuance of show cause notice and the excess availment resulted from mismatch due to third-party default rather than deliberate suppression of facts by taxpayer - HELD - Section 73 applies where tax is wrongly availed for reasons other than fraud, willful misstatement or suppression while Section 74 applies where such wrongful availment is due to fraud, willful misstatement or suppression of facts. Supreme Court in Tata Steel Limited has held that for invoking Section 74, the Assessing Officer must be satisfied that fraud, willful misrepresentation or suppression led to mismatch - Mere mechanical use of such language without establishing foundational facts is not sufficient. The term ‘suppression’ means non-declaration of facts or information required to be declared in returns or failure to furnish information on being asked. Mismatch arising from third-party default cannot be attributed to taxpayer to sustain charge of suppression - When tax and interest are paid pursuant to departmental verification prior to show cause notice under Section 73(5), proceedings are concluded and Section 74 would apply only if conditions stipulated in Section 73 are not met - In present case, appellant paid entire tax and interest after receiving information from proper officer during verification. No link was established between mismatch and alleged fraud or suppression as dispute did not concern genuineness of transactions. Excess availment resulted from third-party supplier default not from taxpayer's deliberate action. Therefore, Section 73 and not Section 74 applies to the case – The penalty imposed under Section 74 is set aside. The case is governed by Section 73 of CGST Act - The appeal is allowed
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