Section 74 GST proceedings and interim penalty stay granted pending further examination of prior credit reversal and waiver claim

The jurisdiction to proceed under Section 74 of the CGST Act was challenged on the basis that input tax credit had already been reversed and paid before the audit process, and that waiver under Section 128A was said to be available; the court did not decide the merits at this stage and instead directed further examination. Interim protection was granted by allowing deposit of the interest component within four weeks, after which recovery of the penalty demand would remain stayed until the next date.

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Issues: Whether the assessment proceedings were correctly initiated under Section 74 of the Central Goods and Services Tax Act, 2017 despite the petitioner's prior reversal and payment of input tax credit, and whether interim protection against the impugned penalty demand was warranted.

Analysis: The jurisdictional basis of proceeding under Section 74 was questioned with reference to the prior deposit made before the audit process and the asserted entitlement to the benefit of waiver provisions under Section 128A. The order also noticed the request for time to file a counter-affidavit and considered the matter fit for further examination.

Outcome: The petition was directed to be listed on a later date, counter-affidavit was called for, and as an interim measure the petitioner was permitted to deposit the interest component within four weeks, upon which recovery of the penalty demand would remain stayed till the next date.

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