First Order of GSTAT paves the direction... On Principles of Natural Justice; On Sections 73 vs 74; Time-barring of CNs; and other issues

The Hon'ble Principal Bench of The GSTAT has delivered its first judgement in the case of M/s Sterling & Wilson Pvt. Ltd. Through Zarine Yazdi Daruvala Versus Commissioner, Odisha, Commissionerate of CT GST & Ors. Sanjukta Gantayat. - 2026 (2) TMI 726 - GSTAT NEW DELHI. In the first judgement itself there are a lot of takeaways in that matters before Principal Bench can also be argued & passed online. Further GSTAT is taking a humane view incase facts/ circumstances are such. Also that GSTAT would also get into 'new facts' incase sufficient grounds are produced for non representation earlier; S.74 Vs S.73 can be argued in GSTAT on facts. A critical issue which has come out of this judgement is that for Credit Notes 'Disclosure in Books' as against 'Disclosure in Return' has been squarely agreed by GSTAT for the purpose of determining the time barring period. The analysis of the case is as follows -

A. On Issues of GSTR-1 vs GSTR-3B

Liability mismatch between GSTR-1 and GSTR-3B can trigger demand, but GSTAT recognizes that CNs/advance adjustments reflected in books (but not in GSTR-1) still hold weight.

Time-barring of CNs is not absolute if disclosure exists in books.

GSTAT is willing to examine new facts and not restrict itself only to questions of law.

B. On Sections 73 vs 74

Fraudulent intent is the dividing line:

• Section 74 requires misrepresentation or intent to evade.
• Section 73 applies in revenue-neutral or bona fide error cases.

First Appellate Authority/GSTAT can re-characterize a 74 order as 73, but only the original adjudicating authority can formally convert it (per CBIC Circular 254/11/2025-GST and Section 75).

C. Principles of Natural Justice

CNs not disclosed in GSTR-1 due to technical constraints cannot be treated as time-barred.

Remand is possible if fresh petitions are filed within 30 days.

GSTAT emphasizes fair hearing before imposing penalties/interest.

D. Humane Approach

Honest taxpayers should be protected if no intent to evade is proven.

Context matters: COVID-19 disruptions, newness of GST law, and automated system errors are recognized.

GSTAT appreciates virtual, paperless hearings - signaling openness to modern compliance processes.

E. Procedural Strategy

Principal Bench matters can be argued online.

GSTAT entertains 'new facts' if sufficient grounds exist for earlier non-representation.

Time-barring disputes hinge on books vs returns disclosure - GSTAT sides with disclosure in books if genuine.