Settled issues under GST. 4. Section 74 to be invoked only appropriately.

Story one: Team Computers case at Delhi High Court:

The taxpayer was aggrieved by the order in appeal (First Appeal) dated 21/05/2024 and approached the Delhi High Court by way of civil writ petition. Despite the fact that the GSTAT was non- functional during the year 2024, The Delhi High Court on 22/08/2024 passed order stating.

“2. Concededly, the petitioner has an efficacious remedy of an appeal under Section 112 of Central Goods and Services Tax Act, 2017, before the Goods and Services Tax Appellate Tribunal.

3. In view of the above, we do not consider it apposite to entertain the present petition, leaving it open to the petitioner to avail its statutory remedies”.

Aggrieved by the above order dated 22/08/2024 of the High Court suggesting a remedy which was not available at that time, approached Supreme Court by way of a civil special leave petition which is still pending but the Supreme Court vide their order dated 13/12/2024 questioned the Central Government as

“6. We would like to first know at the earliest why the Goods and Services Tax Appellate Tribunal has not been made functional till this date”.

Story two: Despite the fact that the GST law is in force since 01/07/2017 and there was a statutory requirement to set up the required number of benches all over India of the Goods and Services Tax Appellate Tribunal, things moved in snail pace till 13/12/2024. As the Central Government was made answerable to the Supreme Court in the Team Computers case, the GST Council in their 56th meeting held on 03/09/2025 formally announced the setting up of the GSTAT.

Story three: Activities got required momentum since September 2025 and the GSTAT benches have now started passing the final orders which are available in the public domain. The developments that took place since September 2025 are tremendous and many benches have started hearing through virtual mode and passing the final orders.

Most Important message for the next two years. Despite CBIC instructions dated 13/12/2023 which reads as “From the perusal of wording of section 74(1) of CGST Act, it is evident that section 74(1) can be invoked only in cases where there is a fraud or wilful mis- statement or suppression of facts to evade tax on the part of the said taxpayer. section 74(1) cannot be invoked merely on account of non-payment of GST, without specific element of fraud or wilful mis-statement or suppression of facts to evade tax. Therefore, only in the cases where the investigation indicates that there is material evidence of fraud or wilful mis-statement or suppression of fact to evade tax on the part of the taxpayer, provisions of section 74(1) of CGST Act may be invoked for issuance of show cause notice, and such evidence should also be made a part of the show cause notice”, the field formations continue to invoke section 74 in a highly arbitrary manner.

One such case has come before the Thiruvananthapuram bench of the GSTAT on 07/08/2026. The Tribunal has passed the final order on 21/08/2026 categorically holding that mere availing the ineligible ITC would not amount to suppression. As per section 50 of the CGST Act which is applicable from 01/07/2017 onwards, interest is attracted only when ineligible ITC is utilised. The department then took a stand that taxpayer has not furnished few details which amounts to suppression. The Tribunal answered in the negative holding that the same would not amount to suppression.

The operative portion of the order dated 21/08/2026 reads as

“28.0 In view of the above findings, we answer both the questions framed for decision in para 1 above in the negative and hold that: In the absence of any other evidence to the contrary, the mere act of the tax payer in taking ineligible self-assessed ITC in their Electronic Credit Ledger in terms of section 42(1) of the CGST Act would not amount to suppression of facts before the department, which would fall within the scope of section 74(1) of the CGST Act. In the absence of any other evidence to the contrary, mere failure to reply to the audit enquiry / final audit report by the tax payer would not amount to suppression of facts in terms of section 74 of the CGST Act, 2017.

29.0 In view of the above, the impugned Order in Appeal is set aside and the appeals are allowed, with consequential relief”.

Conclusion: This is one of the finest orders from the GSTAT which gives rays of hope to all taxpayers that irrespective of adverse orders at adjudication and /or on first appeal, remedy always lies before the GSTAT. It is disheartening to note that the required number of second appeals have not been filed till date as the total e filed appeals in GSTAT as on date is less than 76,000. This is not acceptable due to the fact that the deadline set for legacy cases up to 30/04/2026 already set as 31/07/2026 has crossed and the condonation of delay is possible for those cases only up to October 2026. The fact everyone must be aware is that condonation of delay may be accepted only in cases where the taxpayer was prevented from timely filing due to reasons beyond the taxpayer's control.

Let us hope that the message reaches all the GST officials so that they invoke section 74 only in a highly appropriate manner for the next few years for cases ending 0n 31/03/2024 to avoid the litigation. When the taxpayer gets relief from the GSTAT, the officer who has passed that order must realize the error committed by him and desist from repeating the same in the best interest of justice as he is a quasi-judicial authority.

Case Reference: Santhome Latex Enterprises Versus The Commissioner of CGST Thiruvananthapuram - 2026 (8) TMI 1363 - GSTAT THIRUVANANTHAPURAM.