2025 (4) TMI 620 - HC - GST

Tax Order Challenged: Fraud Allegations Rejected Due to Insufficient Evidence Under Section 74 CGST Act

M/s Singh Electrical Store Versus Superintendent Cgst And Central Excise, Range Azamgarh, Division

HC allowed writ petition challenging tax order under Section 74 of CGST Act. Court found authority's order lacked reasoning and improperly invoked fraud ... Violation of principles of natural justice - no-application of mind by respondent authority - challenge to order passed by the respondent under Section 74 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- It is trite law that to be covered under Section 74 of the Act, there is a mandatory requirement of there being fraud or any willful-misstatement and/or suppression of material facts. This being an essential ingredient of the particular section, the authority concerned could not have made the statement in the impugned order that it was not appropriate for him to deal on this aspect at his level of adjudication. There appears to be complete non application of mind which leads us to intervene in this matter at this stage. Accordingly, the Commissioner, Central Goods and Services Tax, Varanasi is directed to look into this particular issue wherein officers are passing orders under Section 74 of the Act without providing the reasons for invoking Section 74 of the Act for fraud or any willful-misstatement or suppression of material facts. Commissioner, Central Goods and Services Tax, Varansi is directed to take appropriate action at his end. Petition allowed by way of remand. In the case before the Allahabad High Court, the petitioner filed a writ petition under Article 226 of the Constitution of India, challenging an order dated February 21, 2025, issued under Section 74 of the Central Goods and Services Tax Act, 2017. The petitioner contended that the excess claim was due to a clerical error and not intentional, arguing that the case should fall under Section 73 rather than Section 74, which requires fraud, willful misstatement, or suppression of material facts.The court noted that the respondent authority failed to apply its mind by not providing reasons for invoking Section 74, which mandates the presence of fraud or willful misstatement. The court found this lack of reasoning surprising and indicative of non-application of mind, warranting intervention.The court quashed the impugned order and directed the Commissioner, Central Goods and Services Tax, Varanasi, to address the issue of orders being passed without adequate reasoning. The authority was instructed to grant the petitioner a hearing and issue a reasoned order within twelve weeks. The writ petition was allowed, and the Registrar (Compliance) was ordered to communicate this decision to the Commissioner.