Section 74 penalty cannot stand without recorded reasons, especially after tax dues are already discharged.

An order imposing tax demand and 100% penalty under Section 74 was set aside because the record showed the tax dues had already been discharged and the order did not record reasons for invoking Section 74. The court noted payment of the CGST and SGST dues through Form GST DRC-03 and held that, in the absence of recorded reasons, the penalty determination required reconsideration. The matter was remitted for fresh consideration, with liberty to file a detailed reply and receive a fresh hearing, subject to payment of 10% of the cess demand.

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Issues: Whether the impugned order imposing tax demand and 100% penalty under Section 74 could be sustained when the petitioner had already discharged the tax dues and the order did not record reasons for invoking Section 74.

Analysis: The petitioner had availed input tax credit on purchase of a car and later paid the tax dues through Form GST DRC-03. The record showed payment of the CGST and SGST dues, but the impugned order imposed 100% penalty under Section 74 without recording reasons for invoking that provision. In those circumstances, the matter required reconsideration, and the petitioner was put on terms with liberty to submit a detailed reply and receive a fresh hearing.

Conclusion: The impugned order was set aside and the matter was remitted for fresh consideration, subject to payment of 10% of the cess demand and submission of a detailed reply.

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