Section 74 invocation for excess input tax credit found unsustainable; adjudication and appellate orders quashed and remanded.

Section 74 of the CGST Act was treated as inapplicable to a demand based on alleged excess input tax credit, where the record showed a mismatch between GSTR-3B and GSTR-2A but no proper foundation in the show cause notice or impugned orders. The Court noted a contradiction between the adjudicating and appellate orders and found the invocation of Section 74 unsustainable on the stated facts. The adjudication and appellate orders were therefore quashed, with the matter remanded for fresh decision in accordance with law.

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Issues: Whether proceedings and orders invoking Section 74 of the Central Goods and Services Tax Act, 2017 for alleged excess input tax credit were sustainable, and whether the impugned orders were liable to be quashed with remand for fresh decision.

Analysis: The dispute concerned excess availment of input tax credit in GSTR-3B as compared with GSTR-2A and the subsequent departmental action. The Court found a clear contradiction between the adjudicating order and the appellate order, and held that Section 74 of the Central Goods and Services Tax Act, 2017 would not apply on the facts as no proper case had been made out in the show cause notice or in the impugned orders under challenge. Since the foundational basis for the demand and penalty was not sustainable, both orders were found liable to be set aside.

Conclusion: The invocation of Section 74 was held unsustainable, and the impugned adjudication and appellate orders were quashed with a direction for fresh decision in accordance with law.

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