GST second appeal may examine factual reconciliation, and section 74 cases without fraud must be redetermined under section 73.

In GST second appeal, the Tribunal may examine factual reconciliation between GSTR-1 and GSTR-3B and is not confined to a substantial question of law, because section 112 does not import the CPC section 100 limitation. Where fraud, wilful misstatement, or suppression is not established, a proceeding initiated under section 74 cannot be sustained on that basis; under section 75(2), the tax must instead be re-determined as a section 73 matter by the proper officer. The Tribunal therefore held that it could not itself complete the conversion and assessment under section 73 and remanded the matter for fresh adjudication after hearing the taxpayer and considering the documents.

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Issues: (i) whether the Appellate Tribunal in a second appeal under the GST could examine the factual reconciliation between GSTR-1 and GSTR-3B and not be confined only to a pure question of law; (ii) whether, on the facts found, the matter could continue under section 74 or had to be treated as a case of short payment under section 73 with remand to the proper officer for re-determination.

Issue (i): whether the Appellate Tribunal in a second appeal under the GST law could examine the factual reconciliation between GSTR-1 and GSTR-3B and not be confined only to a pure question of law.

Analysis: The Tribunal held that the appellate structure under section 112 of the Central Goods and Services Tax Act, 2017 is different from a second appeal under section 100 of the Code of Civil Procedure, 1908. It noted that the GST appellate provisions do not impose the same limitation of a substantial question of law, and that the Tribunal, while exercising jurisdiction under section 112 read with rule 112, can examine facts as well. It therefore rejected the Revenue's objection that the Tribunal could not revisit factual issues.

Conclusion: The Tribunal can examine questions of fact in a second appeal under section 112 of the Central Goods and Services Tax Act, 2017.

Issue (ii): whether, on the facts found, the matter could continue under section 74 or had to be treated as a case of short payment under section 73 with remand to the proper officer for re-determination.

Analysis: The Tribunal accepted the finding that fraud, wilful misstatement, or suppression of facts to evade tax had not been established. It also accepted that the dispute arose from mismatch and reconciliation issues involving credit notes, debit notes, and return filings. Relying on section 75(2), it held that where proceedings initiated under section 74 are found not sustainable for want of the ingredients of fraud or suppression, the proper course is for the proper officer to determine the tax as if notice had been issued under section 73. Since such re-determination must be done by the proper officer, the Tribunal found that the order could not stand to the extent it itself converted and determined the matter under section 73.

Conclusion: The proceeding could not continue under section 74, and the matter had to be remanded to the proper officer for re-determination under section 73.

Final Conclusion: The impugned orders were interfered with to the extent they themselves sustained conversion and determination under section 73, and the dispute was sent back for fresh adjudication by the proper officer after hearing the appellant and considering the documents and amendment request, if filed.

Ratio Decidendi: In GST second appeals, the Tribunal may examine factual disputes arising from return reconciliation, and where fraud or suppression is not established in a section 74 proceeding, the tax must be re-determined by the proper officer as a section 73 matter under section 75(2).

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