Section 74 Penalties Require Proven Intent to Evade; Pre-Notice Tax Payments Fall Under Voluntary Payment Mechanism

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....Section 74 penalties for excess input tax credit and irregular transitional credit require positive material proving fraud, wilful misstatement, or suppression with intent to evade tax; audit mismatches, record-based discrepancies, and mechanical allegations are insufficient. Where returns and credit declarations are available on the departmental portal and tax and interest are paid before a show cause notice without deliberate evasion, the payments fall within Section 73(5) read with Section 73(8). On those principles, the Section 74 penalties were deleted, and the pre-notice tax and interest payments were treated as voluntary payments. Departmental hierarchy alone also does not establish a real likelihood of institutional bias in statutory appellate proceedings.....