Extended GST limitation supports excess credit proceedings, while unsupported annual-return turnover mismatches require reconsideration on documentary evidence.

Section 74 extended limitation may apply where wrongful input tax credit availment and the statutory basis for alleging tax evasion are established. The notes state that admitted excess credit, together with failure to substantiate turnover reconciliation through relevant VAT and GST returns, can support such proceedings. Payment of tax does not by itself discharge interest liability under Section 50 or penalty exposure under Section 74. A turnover mismatch between GSTR-9 and GSTR-9C, where explained through pre-GST sales, inter-State sales and financial-statement reconciliation but unsupported by returns or records, requires reconsideration on submission of supporting documents.

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Issues: (i) Whether invocation of the extended limitation period and proceedings under Section 74 of the GST enactment were without jurisdiction; (ii) whether the assessment and penalty relating to excess input tax credit were sustainable; (iii) whether the turnover mismatch between GSTR-9 and GSTR-9C required fresh adjudication.

Issue (i): Whether invocation of the extended limitation period and proceedings under Section 74 of the GST enactment were without jurisdiction.

Analysis: Section 74 permits invocation of the extended limitation period where the statutory threshold for alleging evasion or wrongful availment is met. The admitted excess availment of input tax credit, coupled with the failure to substantiate the turnover reconciliation through relevant VAT and GST returns, supported invocation of the provision. The challenge to jurisdiction was therefore not sustainable.

Conclusion: Invocation of the extended limitation period and proceedings under Section 74 were valid.

Issue (ii): Whether the assessment and penalty relating to excess input tax credit were sustainable.

Analysis: The excess input tax credit availed in GSTR-3B over the credit reflected in the relevant records was admitted in part. Payment of tax alone did not discharge the statutory liability to pay interest under Section 50 and penalty under Section 74. As the penalty was not paid before or after issuance of the show cause notice or assessment order, the penalty imposed for the excess credit was not liable to be interfered with.

Conclusion: The assessment and penalty relating to the excess input tax credit were sustained.

Issue (iii): Whether the turnover mismatch between GSTR-9 and GSTR-9C required fresh adjudication.

Analysis: The proposed turnover difference was explained by reference to pre-GST VAT sales, sales in another State, and reconciliation with the financial statements. However, supporting returns and documents had not been furnished. The turnover mismatch consequently required reconsideration after an adequate supporting reply to the show cause notice.

Conclusion: The turnover-mismatch component of the assessment was set aside for fresh adjudication upon submission of supporting documents.

Final Conclusion: The validity of the Section 74 proceedings and the liability relating to excess input tax credit and penalty were maintained, while the turnover-mismatch component was remitted for a fresh order after consideration of supporting records.

Ratio Decidendi: Invocation of the extended limitation period under Section 74 is sustainable where the facts disclose wrongful availment of input tax credit and the statutory basis for alleging tax evasion is established; a turnover discrepancy supported only by an unsubstantiated reconciliation requires fresh adjudication.

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