TaxTMI 
TaxTMI 
05 Sep 2026 
I was really shocked to observe that one of the taxpayer has lost the relief got in first appeal when the department choose to go on second appeal. It is really a complex case involving multiple issues and the taxpayer has miserably lost his case, probably as all the applicable grounds were not taken before the GSTAT by the respondent. Let us analyse this case in detail so as to help the taxpayers as well as tax professionals as to how the grounds should be made very strong. In case facts of the case are correctly stated and grounds of appeal are based on legal interpretation of the relevant section, supported by the recent rulings of the High Courts on identical issues, the case is almost won and even if not, the chances of reversal at the next level is almost certain.
Issue one: The show cause notice was issued for multiple financial years covering 01/07/2017 till 31/03/2024 in one go invoking section 74 on 08/01/2024.
My views: 01) The SCN itself is unsustainable due to non -adherence of CBIC instructions dated 13/12/2023 (notice issued on 08/01/2024 when CBIC Instructions were available) which states that 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. This line of argument seems to be missing before GSTAT.
Issue two: One of the suppliers registration got cancelled with retrospective effect including the date of supply. Hence, department argues that 74 is invokable. This is simply not acceptable due to the fact that when the supplies were made, the registration was active and payments including GST was done through proper banking channel. Hence it can- not be categorised as either fraud or wilful-misstatement or suppression, especially when all the data are available with GST authorities by way of GSTR 1, GSTR 2, GSTR 3 as well as annual returns. In my view section 74 may be invoked by GST officials only in the rarest of the rare cases and that too in compliance with CBIC instructions dated 13.12.2023 as above.
Issue three: Single SCN for multiple financial years. As on date, 100s of high court division bench orders are available in public domain to demonstrate that single SCN for multiple financial years is impermissible. However, there are few contrary decisions as well. This being so, it appears that though this issue was raised before GSTAT, it was not raised vehemently.
Issue four: Order passed under section 107 in first appeal holds that section 73 is applicable and accordingly passed that Confirm demand of Rs.43,44,046/- [CGST & SGST] under Section 73 of the Acts ibid along with applicable interest and penalty; This is a benefit to the taxpayer as penalty under section 73 is only 10%. Whereas the GSTAT has confirmed in page number 37 as The findings of the first appellate authority in respect of the demand of Rs 43,44,046/- (CGST and SGST) stand rejected and the said demand of Rs 43,44,046/- (CGST and SGST) payable along with applicable interest and penalty in terms of Section 74, CGST Act, 2017 as confirmed by the adjudicating authority in the OiO stands restored.
This results in huge penalty.
Conclusion: Based on my observations on CESTAT decisions, I state that when a taxpayer appeals before the CESTAT, the chances of success for taxpayer is around 75% and when the Department goes before the Tribunal as appellant, the chances of success for taxpayer is around 80%. This is only a trend. Contrary to the above, the taxpayer got little relief on first appeal whereas the relief obtained in first appeal is taken away by the Tribunal due to the strong arguments put forth by the Superintendent. While the Superintendent deserves appreciations for protecting the interest of the Revenue, in my view, it appears that the taxpayer has taken this case lightly assuming that his chances of winning are bright and accordingly, did not do the home work properly in either filing the rejoinder or in arguing before the bench. Probably, this might have resulted in adverse order for the taxpayer as so far as the GSTAT bench is concerned, the bench is neither biased towards the taxpayer nor towards GST officials and decisions depend on presentation of facts as well as legal position before the bench of the GSTAT.
Key Take Away: We should not take the appeal before GSTAT either as appellant or as respondent lightly and through home work with all possible grounds supported by CBIC Views on identical situations as well as the latest case laws on identical circumstances by high courts. It is expected that awareness on the above may bring in more success to taxpayer both as appellant as well as respondent.