GST mismatch between GSTR-1 and GSTR-3B can justify Section 74 action, but remand may follow under Section 73 framework.

Mismatch between GSTR-1 disclosures and delayed or non-payment through GSTR-3B was treated as a basis for Section 74 proceedings, because declaration in GSTR-1 did not by itself discharge the tax liability. On that factual footing, interference with the demand and penalty action was not warranted merely for mismatch or alleged procedural defect. The matter was also considered capable of examination under the Section 73 framework in light of the later amnesty scheme under Section 128A, and the case was remitted for fresh consideration under the appropriate statutory route.

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Issues: (i) Whether the demand and penalty proceedings invoked under Section 74 of the Central Goods and Services Tax Act, 2017, based on mismatch between GSTR-1 and GSTR-3B and delayed payment of tax, warranted interference. (ii) Whether the matter could be examined under Section 73 of the Central Goods and Services Tax Act, 2017 in the light of the amnesty framework under Section 128A and be remitted for fresh consideration.

Issue (i): Whether the demand and penalty proceedings invoked under Section 74 of the Central Goods and Services Tax Act, 2017, based on mismatch between GSTR-1 and GSTR-3B and delayed payment of tax, warranted interference.

Analysis: The dispute related to the petitioner's declaration of outward supplies in GSTR-1 and the corresponding non-payment or delayed payment reflected in GSTR-3B during the relevant tax periods. The Court noted that tax on outward supplies was required to be discharged within the prescribed time and that mere declaration in GSTR-1 did not absolve the obligation to pay the corresponding tax through GSTR-3B. On that footing, and in the absence of procedural irregularity in the impugned order, the invocation of Section 74 was not liable to be interfered with on the facts as placed before the Court.

Conclusion: Interference with the Section 74 proceedings was not warranted on the ground of procedural invalidity or mismatch alone.

Issue (ii): Whether the matter could be examined under Section 73 of the Central Goods and Services Tax Act, 2017 in the light of the amnesty framework under Section 128A and be remitted for fresh consideration.

Analysis: The Court took note of the later insertion of Section 128A and the associated amnesty measures for cases where proceedings had been initiated under Section 73. It also noticed the GST Council's deliberations indicating that cases involving non-filing or short payment linked to GSTR-1 disclosures could merit examination under the Section 73 framework. In that context, the Court found that the petitioner's case was capable of being examined under Section 73 and that the matter required reconsideration by the department afresh.

Conclusion: The impugned order was quashed and the matter was remitted to the respondent for fresh exercise under the proper framework.

Final Conclusion: The petitioner obtained partial relief: the adverse order was set aside and the matter was sent back for reconsideration, while the underlying tax controversy was left open for fresh determination.

Ratio Decidendi: Where the factual matrix of non-payment or delayed payment is capable of being examined within the Section 73 framework and later amnesty provisions indicate such treatment, a proceeding initially invoked under Section 74 may be remitted for fresh consideration under the appropriate statutory route.

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