2026-VIL-1018-GUJ
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SGST High Court Cases

GST - Applicability of Section 74 to charitable entity registered under Section 12AA of Income Tax Act, Absence of Wilful Suppression or Fraud - Petitioner was registered under Section 12AA of Income Tax Act and engaged in charitable activities by way of preservation of environment through pollution control treatment and disposal of liquid and solid industrial waste - After introduction of GST regime, petitioner claimed exemptions under Notification No.12/2017 dated 28.06.2017 relating to charitable activities and did not pay GST. As claiming exemption resulted disallowance of input tax credit, petitioner obtained GST registration and thereafter stopped claiming exemption under entry relating to charitable activities from specified date – Issue of notice under Section 74 proposing to demand tax with interest and penalty for period from GST introduction to cessation of exemption claim - Whether Section 74 of CGST Act requiring malafide intent such as fraud, wilful misstatement or suppression can be invoked against the petitioner when the petitioner is engaged in charitable activity and Notification grants exemption from payment of GST - HELD - For invocation of Section 74 requires strict showing of malafide intent such as fraud, wilful misstatement or suppression. Suppression of facts in taxation can have only one meaning that correct information was not disclosed deliberately to escape payment of tax. When facts were known to both parties, omission by one to do what might have been done and not that must have been done does not render it suppression. Mere failure to declare does not amount to willful suppression and there must be some positive act from side of assessee to find willful suppression - From facts of present case, there was no deliberate intention on part of Petitioner not to disclose correct information or to evade payment of tax. Petitioner did not have any malice intent or deliberate intention to evade tax or suppression of facts to evade tax or fraud or willful misstatement made in order to evade tax - Petitioner had stopped claiming exemption and started paying tax since exemption was resulting in losses to disallowance of Input Tax Credit, which cannot be construed that petitioner willfully and deliberately in order to avoid liability of tax did so – The Respondents cannot ignore decision of this Court which is rendered in context of petitioner's activities and registration under Section 12AA of Income Tax Act - The show cause notice which has been issued in ignorance of decision of this Court laying quietus to activities carried out by petitioner which is registered under Section 12AA of Income Act cannot be sustained. - The impugned show cause notice is quashed and set aside – The petition is allowed
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