2026-VIL-179-GSTAT-TVP
  1. Home
  2. 2026-VIL-179-GSTAT-TVP

SGST Tribunal

GST - Penalty under Section 74 of the CGST Act, 2017 on a vague show cause notice - Appellant paid the tax and part of the interest for non-payment of value of supply to suppliers within the stipulated period, and contested only the penalty under Section 74, which the notice sought to impose on the ground that the Appellant had wilfully suppressed material facts and contravened Section 16(2) - Whether penalty under Section 74 is leviable on the basis of the show cause notice - HELD - The show cause notice has not specified what are the material facts wilfully suppressed and is vague and lacking in specificity. The notice suggests that mere contravention of Section 16(2) would render the taxpayer liable for penalty under Section 74. This is not backed by any statutory provision, and the notice itself states elsewhere that contravention of Section 16(2) renders the taxpayer liable for penalty under Section 73 - The applicability of Section 74 was not established either in fact or in law at the notice stage, and the proceedings in respect of penalty are void ab initio. If the allegations are not specific and are vague, lack details or are unintelligible, that is sufficient to hold that the noticee was not given proper opportunity to meet the allegations. The proceedings are vitiated by breach of the basic principles of natural justice - The penalty under Section 74 is not sustainable and set aside – The appeal is allowed - Finding of suppression for invoking Section 74 of the CGST Act, 2017 on the basis of detection by audit and absence of evidence disproving wilfulness - The FAA held that the violation was unearthed only during audit, that there was no evidence to disprove the allegation of wilful contravention, and that the ingredients of Section 74 existed - Whether suppression is established so as to attract penalty under Section 74 - HELD - The ground that the violation was unearthed only during audit is not found in the show cause notice. The order in appeal cannot introduce fresh grounds. Non-payment discovered by audit does not give rise to an automatic presumption of wilful suppression, since otherwise every case of detection by audit would result in proceedings under Section 74. By holding that there is no evidence to disprove wilful contravention, the appellate authority reversed the burden of proof - Unless there is a clear-cut statutory provision to the contrary, the burden of proof is always on the Revenue and cannot be shifted to the Appellant - The finding of suppression is not established and is not legally sustainable - Introduction of new contentions by the Revenue at the second appellate stage to support penalty under Section 74 - The Authorised Representative of the Revenue argued before the Tribunal that the Appellant failed to report the ineligible input tax credit in the returns for non-payment to suppliers, which amounted to suppression under Explanation 2 to Section 74 - Whether the Revenue can rely at the Tribunal stage on grounds not found in the show cause notice, order in original or order in appeal - HELD - Though the arguments have considerable force, they are not part of the show cause notice, order in original or order in appeal. A show cause notice or adjudication order has to stand on its own merit and cannot be improved upon or embellished through submissions made by the Revenue at the second appellate stage. The Supreme Court has held that when an authority has issued a notice or order, the requirements to make it valid should be contained in the notice or order itself and cannot be supplanted by a counter affidavit in court - The submissions cannot help the Revenue when no case is made out for invocation of penalty under Section 74 in the SCN, and the appeal is allowed as regards penalty.
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Weekly Tax Recap

By Dr. G. Gokul Kishore

Weekly Summary

VIL Video

GST & Customs updates: Sep'26
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Security-Code
New Code?

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Security-Code
New Code?

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?