GST officials may exercise extreme caution to avoid imposition of cost on them.

I have been advocating to all GST officials all over India from State as well as Central to exercise extreme caution in strict adherence of the Sections 73, 74 as well as 74A and 75. There are at least 100s of writs available in public domain where the OIO was either set aside or even quashed for non-adherence of the principles of natural justice. While section 74, which was applicable only during 01/07/2017 till 31/03/2024 itself is not properly understood by several tax officials which is evident from the improper invocation of such section, one officer passed order in a hurried manner under section 74A and the division bench of the High Court at Nagpur on 04/09/2026 in writ petition number 2973 of 2026 imposed a cost of Rs. 50,000/ on the tax officer who has contravened the Section 74A of the CGST Act, 2017.

The story: SCN was issued on the taxpayer, Hind Maha Mineral LLP on 11/11/2025 by invoking section 74A. Clause (ii) of sub section 8 of section 74A reads as " the taxpayer may pay the said tax along with interest payable under section 50 within sixty days of issue of show cause notice, and on doing so, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded". This clause is squarely applicable for all non-fraud cases. This being so, the taxpayer had time till 10/01/2026 to take a call as to exercise this option or not. However, the OIO was passed on 05/01/2026 itself, despite the fact that the same could have been passed much later as there were no constraints on time to pass so quickly.

The main argument was that no personal hearing was granted. The records also reveal so and the Respondent could not deny this fact. Hence an attempt was made by the respondent by quoting a wrong citation stating that appellant must prefer first appeal under section 107 only and the writ must be dismissed. The bench noticed that the case law quoted by the respondent was irrelevant on the facts of the case.

The bench, on their own imposed a cost and the para reads as "12. In the present case, it is evident that opportunity of hearing was not given and secondly, that, the impugned order is passed in breach of the provisions under clause (ii) of sub-section 8 of Section 74A of the Act of 2017. Thus, the respondents are aware that the order is unsustainable. The respondents, in such circumstances, should have taken corrective steps upon receiving notice in the petition. Having not done so, we deem it appropriate to direct the respondent No.3 to pay cost of the litigation to the petitioner, which we quantify to Rs. 50,000/- (Rs. Fifty Thousand only). The cost should be paid within two weeks from today".

The writ petition stood allowed by setting aside as well as quashing the OIO dated 05/01/2026. This case law is a real eye opener for all tax officials who presume themselves to be competent to pass any order as they deem fit as the bell has already been fixed in the Cat's neck by this judgement. In the past also, there were several situations where the tax officials far exceeded the limits and the counsel for the petitioner did not insist on cost imposition on the erring tax officials for obvious reasons. However, the day has come where the bench itself felt it as a fit case to impose cost on the erring tax officer. The best part is the quantity fixed at Rs. 50,000 as well as time limit set as two weeks from 04/09/2026 which ends on 18/09/2026.

Key take aways: Under the erstwhile section 73 which is applicable only up to 31/03/2024, the taxpayer had a time of only 30 days (refer 73(8)), the modified section 74A grants sixty days to decide. The best course of action should be to bifurcate disputed amount and undisputed amount and pay 100 % of undisputed portion within permissible time with applicable interest which saves penalty.

For Tax Officials: The GSTAT as well as High Courts or Supreme Court are there to ensure justice to the taxpayer. At the end of the day, when an order passed by the so called Quasi-Judicial Officer is set aside or quashed by a higher court, the controlling officers of the officials may immediately depute the respective officer for appropriate training. It is once again reiterated that the same officer expects the taxpayer to follow each and every section as well as all the provisions scrupulously whereas the officer himself violates several provisions as in the above case. Kindly note that the order IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH AT NAGPUR WRIT PETITION NO. 2973/2026 Hind Maha Mineral LLP Versus The State of Maharashtra, through its Secretary, Department of Goods and Services Tax, Mumbai and Others - 2026 (9) TMI 800 - BOMBAY HIGH COURT is available in the public domain and all taxpayers as well as tax professionals are aware of this development. In case any reader requires the copy, the same may be requested through [email protected]

It is not my case to reduce tax or interest or penalty but definitely my case is that any OIO as well as OIA by the first appellate authority must withstand the test of time and when the taxpayer approaches the GSTAT by way of second appeal or High Court by way or writ, in case the OIO or OIA or both or set aside or quashed, it has one and only one interpretation that the order was wrong. It is time to all tax officials to think on 1) Are they willing to continue to pass wrong orders?. 2) Are they prepared to meet the imposition of cost which has already started ?.

The choice is that of the tax officials to decide appropriately on 1 as well as 2. This is more so now as the High Court is categorical that once the writ is preferred, the respondent must correct the errors on their own and inform the court appropriately.