2026-VIL-253-GSTAT-BLR
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SGST Tribunal

GST - Imposition of penalty under Section 74 of CGST Act, 2017 where tax was paid with interest before the SCN on supplies not declared in return - Meaning of suppression under Explanation 2 - The authorities held that non-disclosure of the value of supplies in the return amounted to suppression and that payment made only after audit verification justified penalty - Whether imposition of penalty under Section 74 is justified - HELD - Section 73 applies to non-payment for reasons other than fraud, wilful misstatement or suppression, while Section 74 applies only where these elements exist, and Sections 73(5) and 74(5) permit payment before the SCN on the basis of own ascertainment or the tax ascertained by the proper officer, who can point out an omission during audit - The mere omission in a statutory return or the subsequent payment pursuant to audit verification cannot, without examining the circumstances, be treated as conclusive of the ingredients of Section 74(1), and mere recording of transactions in books of account does not by itself establish either the existence or absence of suppression - The officer must be satisfied that fraud, wilful misstatement or suppression led to the short payment. The authorities did not consider the explanations that legal and sponsorship services were received by clients, that expenses of site supervisors were meagre and covered by an earlier exemption - The Appellant bona fide believed payment of invoices carrying tax discharged the liability on cab services and that the written-off amount was a money transaction. The Appellant had reasonable cause and no intention to evade tax, and the records were not disputed - Penalty under Section 74(1) held unjustified and set aside, the order of the FAA set aside and the appeal allowed
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