2026-VIL-178-GSTAT-TVP
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SGST Tribunal

GST - Confirmation of tax demand under Section 74(1) of the CGST Act, 2017 by the FAA after holding Section 74 to be inapplicable - Show cause notice proposed disallowance of input tax credit on the ground that the invoices were not reflected in GSTR-2A, and the demand was confirmed under Section 74 - The FAA held that there was no fraud, willful misstatement, collusion or suppression, but upheld the demand of tax and interest - Whether the demand of tax confirmed under Section 74(1) can be sustained when the appellate authority itself found Section 74 to be inapplicable - HELD - The appellate authority made a clear-cut and well-reasoned finding on non-applicability of Section 74, which was not challenged by the Revenue either by way of appeal or cross-objections. Upholding the demand under Section 74(1) is in contradiction to its own findings and is a classic case of non-application of mind - The Revenue contended that no prejudice was caused as the demand would have sustained even if re-determined under Section 73 within limitation. The Revenue having issued a show cause notice under Section 74 cannot be permitted to plead at the second appellate stage that the demand can still be confirmed under Section 73 on a ground or section which was not invoked in the notice. The demand remains unsustainable notwithstanding that it would have been within limitation under Section 73 - The demand of tax is set aside and the appeal is allowed - Penalty under Section 73(9) beyond the SCN - Penalty imposed by the appellate authority under Section 73(9) of the CGST Act, 2017 when the show cause notice proposed penalty under Section 74(1) - Whether the appellate authority could impose penalty under a section different from the one invoked in the show cause notice - HELD - The appellate authority, having found the penalty under Section 74(1) not sustainable, ought to have stopped right there. The show cause notice contained no charge with regard to the imposition of penalty under Section 73(9). The act of the appellate authority is dehors the charges laid out in the notice and travels beyond its scope. The Appellant was never asked to show cause why penalty should not be levied under Section 73(9). Once the penalty in the appellate order has been passed under a different section than that with which the Appellant was charged, it is null and void, and the Revenue cannot plead that the penalty is much less and therefore in order. On these jurisdictional grounds alone the Appellant is entitled to succeed and the other grounds need not be discussed - The penalty is set aside, the order in appeal is set aside and the appeal is allowed.
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