2026-VIL-317-GSTAT-KOL
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SGST Tribunal

GST - Invocation of extended period under Section 74(1) of the CGST Act, 2017 in the absence of fraud, wilful misstatement or suppression - Appellant supplied goods of two categories, and on audit a notice under Section 74 was issued for three financial years alleging short payment of tax on supplies detected in the profit and loss account but not declared in the returns, among other objections - Entire demand was confirmed with interest and penalty, and Appellant paid the tax before the notice, disputing only the invocation of Section 74 - FAA dropped interest and penalty for the first year since the accounts had been uploaded and no suppression was established, but upheld them for the other two years on the ground that the records were not available with the department before audit - Whether proceedings under Section 74 are tenable for the subsequent two years - HELD - Proceedings under Sections 73 and 74 can be initiated only on the satisfaction of the Assessing Officer, and for a notice under Section 74 the officer must be satisfied that fraud, wilful misrepresentation or suppression led to the short payment, the foundational facts for which must be evident from the notice and not mechanically recited - The Appellant had not filed the annual reconciliation statement owing to an exemption based on aggregate turnover, a plea not objected to by the Revenue. The discrepancy was detected solely from documents prepared and produced by the Appellant, no incriminating material was found - Not discharging liability before audit does not necessarily mean wilful suppression, as action under Section 74 requires definite evidential support forming part of the notice in terms of the Board instruction. The reasoning of the FAA for the first year therefore holds equally good for the subsequent two years - Proceedings under Section 74 are not tenable and are quashed, the Revenue is precluded from taking action for the first year being time barred, the order of the FAA for the other two years is set aside - The matter is remanded to the proper officer to determine the tax afresh under Section 75(2) deeming the notice to be issued under Section 73(1) with liberty to the appellant to approach the officer for the benefit under Section 128A – The appeal is disposed of
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