2026-VIL-247-GSTAT-GZB
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SGST Tribunal

GST - Validity of demand under Section 73 of the CGST Act, 2017 raised on aggregate return mismatch without particulars in the SCN – Appellant initially treated supplies made in the earlier year as inter-State and paid tax under IGST, later found them to be intra-State and amended the invoices in GSTR-1 of the following year - On comparison of GSTR-1 and GSTR-3B, the Department issued an SCN alleging short payment of tax and excess Input Tax Credit invoking Section 16(2)(c) without disclosing the essential facts supporting the demand - Whether the SCN disclosed the essential facts supporting the demand and whether the later order, reply or appeal could cure the omission - HELD - Section 73 requires a meaningful SCN before an adverse determination, which must tell the taxpayer what factual case is proposed and why the stated amount is recoverable. The Sections 75(6) and 75(7) bar an order from supplying a case or grounds not specified in the notice - The SCN contained only a comparison of returns and general conclusions of short payment, improper passing of credit and non-payment by suppliers, without identifying disputed invoices, dates, suppliers, recipients or supplies. Mere reference to Section 16(2)(c) cannot replace such particulars - The SCN is the foundation of the departmental case and vague allegations lacking necessary details deny a proper opportunity to answer - Department cannot travel beyond the SCN or convert an aggregate mismatch into an unnotified case of fictitious invoices or non-receipt of supplies. Knowledge of the amount sought does not amount to knowledge of the case to be met, although no inflexible rule is laid down that every mismatch notice must reproduce every invoice - The defect being substantial and not cured by the reply, adjudication or appeal. The demand is set aside and the appeal is allowed - Appropriation of IGST paid on supplies later held to be intra-State towards CGST and SGST liability - Sections 77 of the CGST Act and 19 of the IGST Act - Appellant sought appropriation of IGST already paid on the disputed supplies towards the corresponding CGST and SGST - Revenue contended that tax must be paid under the correct head followed by a refund claim - Whether the earlier IGST payment can be appropriated towards CGST and SGST without insisting on a second deposit - HELD - Section 77(2) of the CGST Act and Section 19 of the IGST Act recognise the obligation to correct a mistaken classification but do not confer an unrestricted right of unilateral cross-head adjustment, and payment of one levy does not automatically discharge another. However, the Revenue cannot ignore an established payment that has discharged the liability, and the right to correct clerical or arithmetical mistakes flows from the right to do business - The taxpayer must establish the identity and availability of the payment, while the competent authorities must carry out the correction with separate accounting of any excess or shortfall. Revenue neutrality must be demonstrated by matching the disputed supplies, their value, rate, original payment and later liability, and by confirming that the amount has not been refunded, restored to the ledger or adjusted elsewhere, and once established, collecting the same amount again serves no purpose and offends proportionality – The jurisdictional proper officer shall arrange appropriation of the IGST already paid on the disputed supplies towards the corresponding CGST and SGST through reconciliation of accounts between the Centre and the State - Leviability of consequential penalty under Section 73 of the CGST Act, 2017 where the demand proceeding lacks a sufficient SCN - Whether the penalty can survive when the demand fails - HELD - Section 73 applies to cases not involving fraud, but the absence of fraud does not automatically exclude a penalty, and the provision does not impose a penalty on every corrective entry. If the finding of tax short paid or credit wrongly availed fails, a penalty based on it cannot survive independently. The penalty cannot be maintained on a demand proceeding that lacks a sufficient SCN - The penalty is set aside, the relief already granted from interest and the dropping of the Input Tax Credit proposal are maintained, and the appeal is allowed.
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