Extended limitation under GST can apply on admitted return discrepancies and unpaid tax, while misdescribed late fee requires correction.

Invocation of the extended limitation period under Section 74 is described as sustainable where the record shows admitted discrepancies between GSTR-1 and GSTR-3B, partial admission of tax liability, and non-payment of tax for the relevant period. The note also distinguishes a late fee for delayed filing of annual return forms GSTR-9 and GSTR-9C from a general penalty, stating that a wrongly described levy should be corrected to reflect its true legal character. It explains that the principal challenge to limitation failed, while correction of Defect No.10 and the related revenue abstract was required through a corrigendum.

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Issues: (i) Whether invocation of the extended period of limitation under Section 74 of the GST enactments was justified on the basis of the tax shortfall and non-filing of returns; (ii) Whether the amount described in Defect No.10 was correctly treated as a penalty or required correction as a late fee for non-filing of annual return.

Issue (i): Whether invocation of the extended period of limitation under Section 74 of the GST enactments was justified on the basis of the tax shortfall and non-filing of returns.

Analysis: The tax liability had been admitted in part on the basis of the discrepancies between GSTR-1 and GSTR-3B, and the record also showed non-payment of tax for the subsequent period. The notices and inspection reports preceded the impugned order, and the material on record was sufficient to indicate failure to discharge tax liability for the relevant period. On that basis, the threshold for invoking Section 74 was held to be satisfied.

Conclusion: The invocation of the extended period of limitation under Section 74 was upheld, against the Petitioner.

Issue (ii): Whether the amount described in Defect No.10 was correctly treated as a penalty or required correction as a late fee for non-filing of annual return.

Analysis: The impugned order and the revenue abstract did not properly reflect the discussion relating to Defect No.10. The stated levy was not a general penalty, but a late fee arising from failure to file the annual return in GSTR-9 and GSTR-9C in time. The figures in the abstract required correction to align with the discussion in the order.

Conclusion: The levy under Defect No.10 was directed to be corrected as a late fee, in favour of the Petitioner to that limited extent.

Final Conclusion: The challenge failed on the main issue of limitation under Section 74, but the matter was sent back for issuance of a corrigendum to correct Defect No.10 and the corresponding revenue abstract.

Ratio Decidendi: Where the record shows admitted turnover discrepancy and non-payment of tax for the relevant period, invocation of Section 74 is sustainable; a wrongly described levy in the order must be corrected to reflect its true character.

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