To err is human, to forgive is Divine.

GST in India is still in evolving stage as several orders passed by State level officers as well as Central level officers are being quashed day in and day out by the jurisdictional high courts. In the initial years, due to the novel concept introduced in India for the first time on 01/07/2017 covering 3 types of taxes such as IGST, CGST and SGST, confusion prevailed amongst few taxpayers as to whether the specific transaction is covered under Inter state supply or intrastate supply due to complex provisions in place of provision of  supply. Hence, errors were happening in paying IGST as CGST and SGST or vice versa.

One of my clients covering the period from 01/04/2019 till 31/03/2024 availed IGST of 7,62,953 inadvertently as  CGST and SGST of 381477 each. In a like manner, he has also availed CGST and SGST each of 491844,  as against IGST. Tax demand was raised on 28/09/2025 by invoking section 74 to pay 17,46,641 which is the sum of all the three components. As a tax professional,  I wonder how things could happen like this.

1. In the particular para 3.3 proposing recovery of GST of 17,46,641 with applicable penalty, there is no mention by audit on short payment or non payment or availing ineligible ITC. As such, as held by various high courts, 73 itself is not applicable in this situation  whereas 74 is wrongly applied without any allegation of fraudulent intention of taxpayer. How this is possible?
2. Even assuming (but without admitting) that the audit team is correct in their observations, out of this 17,46,641, Central Government share is 12,34,797 consisting of CGST and IGST and respective state GST is 4,91,844. Out of the above respective share of 12,34,797, Centre has already got their share of 12,34,797 in full with an additional amount of 110367 whereas the respective State Government (only one state involved) got exactly 110367 less than the actual due. Thus, how is it possible for net difference of 110367 to raise a demand of 1746641?.
3. The SCN dated 28/09/2025 raised the demand for full IGST plus SGST plus CGST and also levied penalty under section 74.  It was argued before additional commissioner on 11/11/2025 that Section 74 is not applicable as even 73 is not applicable under the current demand as there is no short payment or non payment of GST except that 1,10,367 was paid as IGST as against CGST.
4. Three case laws out of which two are from jurisdictional high court were also furnished to strengthen the arguments. However, on 20/01/2026 Additional Commissioner passed orders confirming the entire demand and levied penalty as well.
5. The justification given by the Additional Commissioner is reproduced below: “ When credit has been availed under IGST head instead of CGST and SCGT, there is loss of revenue to state as credit has been taken from that State. Hence, this is not revenue neutral and CGST and SGST credit has to be reversed along with interest”.
6. Section 77 (2) of CGST act stipulates that under the above circumstances, no interest is payable under IGST, CGST as well as SGST. The additional Commissioner is neither seem to be bound by CGST law nor by the Jurisdictional High Court rulings.

Now let us focus on the jurisdictional high court views.

Case 1 M/s. Sun Dye Chem Versus The Assistant Commissioner (ST), The Commissioner of State Tax - 2020 (11) TMI 108 - MADRAS HIGH COURT. The operative portion reads as:

20. In the absence of an enabling mechanism, I am of the view that  assessees should not be prejudiced from availing credit that they are otherwise legitimately entitled to. The error committed by the petitioner is an inadvertent human error and the petitioner should be in a position to rectify the same, particularly in the absence of an effective, enabling mechanism under statute.

21. This writ petition is allowed and the impugned order set aside. The petitioner is permitted to re-submit the annexures to Form GSTR-3B with the correct distribution of credit between IGST, SGST and CGST within a period of four weeks from date of uploading of this order and the respondents shall take the same on file and enable the auto-population of the correct details in the GST portal. No costs.

Case 2: Deepa Traders Versus Principal Chief Commissioner of GST & Central Excise Chennai, Tamil Nadu, Superintendent of GST, Central Excise, Coimbatore Goods and Services Tax Network (GSTN), New Delhi - 2023 (3) TMI 628 - MADRAS HIGH COURT

8. As held by the Apex Court, human errors and mistakes are normal, and errors are also made by the Revenue. The right to correct mistakes in the nature of clerical or arithmetical error is a right that flows from the right to do business and should not be denied unless there is a good justification and reason to deny benefit of correction. Software limitation itself cannot be a good justification, as software is meant to ease compliance and can be configured.

9. Therefore, appeal stands dismissed. There will be no order as to costs. Consequently, CMP No. 8685 of 2025 stands disposed of.

The story does not stop here. Despite the Honorable Supreme Court on 25/08/2025 dismissing the SLP filed by Revenue which was duly represented by none other than the A S G of India himself, the Additional Commissioner while passing the order on 20/01/2026 has ignored the S C Ruling.

The words of the Supreme Court in the above SLP reads as :

2. we do not find any merit in the present special leave petition.

3. The special leave petition is, accordingly, dismissed.

4. Pending application(s), if any, shall stand disposed of.

The view that no demand possible for tax head mismatch was uniformly taken by a single member bench, by the Division Bench and again confirmed as correct by Supreme Court.

In my view, the OIO dated 20/01/2026, passed by the highest authority at Central level for passing such adjudication orders (level 3 and final) being the additional commissioner appears to have ignored the following points.

1. Section 74 wrongly invoked against the Instructions dated 13/12/2023 of CBIC. This fact is apparent in OIO itself.
2. Single OIO for four financial years impermissible as per jurisdictional high court verdicts. The Additional commissioner is bound to keep updated on latest jurisdictional high court rulings and pass orders in compliance with such rulings.
3. Two High Court orders as well as dismissal of SLP by Supreme Court (filed by Revenue)  does not seem to bind the Additional Commissioner.
4. Out of several issues against which replies were furnished and reemphasized during personal hearing on 11/11/2025, in almost all issues except where applicable taxes were already paid and proof submitted, the allegations of SCN are fully confirmed without proper justifications.

The moot questions are:

1. Are we going to improve in quality of Adjudication orders or would like to ensure that most of the Adjudication orders are likely to be appealed against to ensure full work load for tax professionals?.
2. Is the CBIC sensitized to note that many Special Leave Petitions filed by Revenue are Simply dismissed by Supreme Court as in the above case?.
3. Would not it be possible for the CBIC to issue instructions at least when a particular issue attains finality at Supreme Court by way of dismissal of SLP or we are planning for retrospective amendment in GST laws from 01/07/2017?.

Conclusion: Let us hope that after publication of this article, minor and procedural errors are allowed to be ratified/ rectified  by proper mechanism so as to ensure that 90% of the Honest Taxpayers are happy with the Adjudication proceedings as well as orders.