2026-VIL-61-GSTAT-TVP
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SGST Tribunal

GST - Availment of Ineligible Input Tax Credit - Suppression of Facts under Section 74 - Ineligible self-assessed ITC and contravention of Sections 16(2) and 42(1) - Department issued a show-cause notice under Section 74(1) of the CGST Act, 2017 proposing recovery of excess input tax credit as alleged suppression of facts - Whether the mere act of the taxpayer in taking ineligible self-assessed input tax credit in their electronic credit ledger in terms of Section 42(1) of the CGST Act would amount to suppression of facts before the Department, which would fall within the scope of Section 74(1) of the CGST Act - HELD - Section 74(1) of the CGST Act can be invoked only in cases where there is fraud or willful misstatement or suppression of facts to evade tax on the part of the taxpayer. The mere act of taking input tax credit without verifying the eligibility thereof, in the absence of any statutory presumption or evidence to establish that the taxpayer knew that a particular input tax credit was not eligible, will not amount to suppression of facts. Every act of transgression of Section 16(2) or Section 42(1) of the CGST Act cannot be termed as a violation inviting proceedings under Section 74 unless clear and categorical evidence has been adduced to the effect that the said transgression was the result of fraud, willful misstatement or suppression of facts with an intent to evade tax - Mere contravention of Section 16(2) and Section 42(1) of the Act cannot be considered the reason for fraud or willful misstatement or suppression of facts. The Department failed to adduce any material evidence of fraud or willful misstatement or suppression of facts in the show-cause notice as required by Board Instruction No. 05/2023-GST dtd. 13.12.2023 - The taxpayer had already disclosed the invoice-wise reconciliation explaining the alleged input tax credit difference through GSTR-9C annual return filings and uploaded the required documents on the GST portal, thereby disclosing the facts - In the absence of any evidence to the contrary, the mere act of the taxpayer in taking ineligible self-assessed input tax credit would not amount to suppression of facts under Section 74(1) of the CGST Act - The impugned order-in-appeal is set aside and the appeals are allowed - GST - Suppression of Facts under Section 74 - Failure to Reply to Audit Enquiry and Final Audit Report - Natural Justice and Procedural Regularity - Whether failure to furnish information and reply to audit enquiry and final audit report by the taxpayer would amount to suppression of facts in terms of Section 74 of the CGST Act and whether grounds of appeal can be raised at the appellate stage which were not part of the original show-cause notice - HELD - Raising additional grounds at the appellate stage which are not found in the show-cause notice is against the fundamental principles of natural justice and the appellate authority ought to have rejected such grounds. The expression suppression under Explanation 2 to Section 74 means non-declaration of facts or information which a taxable person is required to declare in the return, statement, report or any other document furnished under the Act or rules, or failure to furnish any information on being asked for in writing by the proper officer. However, such suppression must be willful and with intent to evade tax. Mere failure to reply to the audit enquiry and final audit report cannot amount to suppression of facts when the underlying data and reconciliation information had already been disclosed through statutory filings on the GST portal in GSTR-9C returns - Failure to provide information in response to an audit observation does not constitute suppression under Section 74 where all relevant facts were already available on the common portal. No statutory obligation exists for a taxpayer to furnish written replies to the final audit report - The order-in-appeal violated natural justice by introducing new grounds not part of the original notice and did not discuss or dislodge the factual findings of the adjudicating authority that the reconciliation had been disclosed through GSTR-9C annual return filings - In the absence of any evidence to the contrary, mere failure to reply to the audit enquiry and final audit report by the taxpayer would not amount to suppression of facts in terms of Section 74 of the CGST Act. The order-in-appeal suffered from non-application of mind and violation of natural justice principles. The impugned order is set aside and the appeals are allowed
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