TaxTMI 
TaxTMI 
2026 (10) TMI 74
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....-payment of interest pertaining to the financial year 2017-2018. SCN dated 05/08/2024 was served on the taxpayer asking him to pay or to show cause as to why the following amount of tax, interest and penalty were not be recovered from him : "6. Now, therefore, M/s. SUMMIT HOTELS & RESORTS PRIVATE LIMITED, having their registered principal place of business at at G0402, Office Block - G, City Centre, Uttorayan, Darjeeling, West Bengal, 734010 registered with GSTIN: 19AAXCS7643D1ZPare hereby called upon to show cause under Section 74 of the Central Goods and Services Tax Act, 2017 read with Rule 142 of Central Goods and Services Tax Rules, 2017 to the Superintendent, Range IV, SILIGURI-DARJEELING DIVISION, Siliguri CGST & CX Commissionerate, (herein after referred as the Adjudicating Authority), within 30 (thirty) days of the receipt of this notice, as to why: i) Tax amounting to Rs. 34,09,397/- (IGST Rs. 4,358/-, CGST Rs. 14,58,733/- & SGST Rs. 19,46,306/-) (Rupees Thirty Four Lakh Nine Thousand Three Hundred and Ninety Seven only) being the amount paid beyond due date contravention of Section 9(1) & Section 39 of the said Act during the relevant period should not ....
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....en hundred Sixty-four Only) during the period 2017-18 on delayed payment of tax liability in cash in terms of Section 50 (1) of the CGST Act 2017 read with identical provisions under the WBGST/IGST Act 2017; 9.4 I however order for appropriation of the interest amount as stated in Para 5.3 above as the same has already been paid to the government exchequer vide DRC-03 dated 12.07.2022; 9.5 I impose penalty of an amount equal to the amount of confirmed demand [at para 5.1 supra] under Section 74 (9) of the CGST Act 2017 and identical provisions of the WBGST/IGST Act 2017. However, I allow the benefit of reduced penalty subject to fulfilment of the conditions as laid down in Section 74(11) of the CGST Act, 2017 (as amended); 9.6 I also order for entry of the demand in the Electronic Liability Register (Part-II: other than return related liabilities) of the Noticee (taxpayer) in the Form GST [PMT-01]." [6]. Aggrieved taxpayer challenged the said OIO by filing an appeal under Section 107(1) of the CGST Act, 2017 before the first appellate authority. The first appellate authority was of the view that the revenue could not make out a case under Section 74(1)....
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....and considered their submissions. [9]. Mr. Shaw, the authorised representative of the revenue has vehemently contended that belated payment of tax and short payment of interest amounts to fraud contemplated under Section 74, CGST Act, 2017. Therefore, Mr. Shaw urges this Tribunal for setting aside the impugned order passed by the first appellate authority by restoring the order of the adjudicating authority. [10]. Mr. Mayank Agarwal, CA, appearing for the taxpayer, on the other hand, contended that none of the ingredients contemplated under Section 74(1) of the CGST Act, 2017 has been fulfilled in this case to justify invocation of Section 74(1) of the CGST Act, 2017. Mr. Agarwal has further contended that Section 74 of the CGST Act, 2017 cannot be invoked for belated filing of tax and return. Mr. Agarwal, therefore, submits that the appeal has no merit and there is no ground to interfere with the order passed by the first appellate authority. [11]. We have made a detailed discussion in the case of M/s Powertech Global Private Limited, reported in (2026) 1 GSTAT E Journal 51 (Kolkata) as to the application of Section 74(1), CGST Act, 2017 with reference to various judgment....
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....anation 2 to sub-section (12) of Section 74-A, thus provides that "suppression" shall mean non-declaration of facts or information which a taxable person is required to declare in his return, statement, report or any other document furnished under this Act. There is no dispute that the taxpayer duly filed his monthly return in GSTR Form-3B as well as in his annual returns. We have gathered from the documents uploaded on behalf of the taxpayer that he filed his monthly GSTR returns in Form No.3B almost regularly for the assessment period. Even there is no allegations against the taxpayer that he did not submit his annual returns. The taxpayer has also uploaded his annual returns on the portal. There is, therefore, no act of non-submission or non-declaration of facts or information on the part of the taxpayer. He also produced the invoices to bring to light the fact that he used to sell duty credit scrips. Therefore, no mala fide intention could be attributed to the taxpayer. [61]. Pursuant to the direction of the Hon'ble Supreme Court in the case of Northern Operating Systems Private Limited (NOS) in Civil Appeal No. 2289-2293 of 2021, an instruction bearing No. 05/2023-GST....
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....venue to establish fraud, wilful mis-statement or suppression of facts within the meaning of Section 74(1) read with Explanation 2 to sub-section (12) of Section 74 of the CGST Act, 2017. If we go further, suppression of facts cannot be equated with ordinary non-declaration. The wordings of Section 74(1) clearly indicates that there must be a deliberate intention on the part of the taxpayer to evade tax. [63]. In the present case before us, stand of the taxpayer right from the beginning is that he is entitled to the benefit of clause (d) in Explanation 1 to Rule 43 of CGST Rules, 2017 retrospectively. Under this impression, he made his self-assessment in Form GSTR-3B. He never concealed that he availed ITC on the value of supply of duty credit scrips. The department was not also unaware of the fact that he supplied duty credit scrips during the financial years 2017-20. When both sides were aware of the fact, the taxpayer cannot be accused of fraud or wilful suppression. In the case of Anand Nishikawa Co. Ltd. Vs. Commissioner of Central Excise, Meerut, reported in (2005) 7 SCC 749, the Hon'ble Supreme Court in paragraph 26 of the judgment succinctly held that the "suppress....
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....2023 issued by the CBIC as well as in the given facts and circumstances of the case. In our considered view the Revenue could not bring on record any material to prove a deliberate intention on the part of the taxpayer to evade tax and as a result the Revenue was not correct in invoking Section 74(1) of the CGST Act against the taxpayer in this case. Therefore, the SCN issued under Section 74(1) of the CGST Act, is not sustainable in this case." [12]. The Hon'ble Supreme Court in a recent judgment delivered on 25.08.2026 in the case of M/s Tata Steel Limited vs Union of India through the Secretary, Ministry of Finance and others, in which a demand was created under Section 74, CGST Act, 2017 has held that the foundational facts which led the assessing officer to arrive at the inference of fraud/ wilful misrepresentation/ suppression should be evident from the notice itself. In paragraph 14 of the judgment, the Hon'ble Apex Court has held as under: "14. It is not mere lip service to the provisions that is intended when an extended limitation period is provided for recovering an excess benefit availed, short payment or excess refund, from the assessee, especially when the....