Tax Consultant

 GSTAT Remands Case as Section 74 Not Sustainable Due to Absence of Fraud The Gujarat State Tax Appellate Tribunal (GSTAT), in a landmark ruling, has remanded a GST case back to the proper officer because proceedings under Section 74 of the CGST Act were deemed unsustainable without evidence of fraud, willful misstatement, or suppression of facts. This decision in the case of M/s Sterling & Wilson Pvt. Ltd. emphasizes strict interpretation of penal provisions and protects honest taxpayers from harsh penalties. Case Background Sterling & Wilson Pvt. Ltd., an EPC contractor under GST, faced a demand for FY 2018-19 due to a mismatch between GSTR-1 (output tax ₹31.36 crore) and GSTR-3B (₹31.09 crore), leading to an alleged short payment of ₹27.06 lakh plus interest and penalty. The department invoked Section 74, alleging suppression and intent to evade tax, despite transactions being recorded in books via debit/credit notes. ​ The Proper Officer confirmed the demand ex parte. O...

Judicial Precedents on ITC Where Supplier Registration Is Cancelled / Supplier Found Bogus 🔴 CASE LAWS IN FAVOUR OF THE RECIPIENT (Bona Fide Buyer) 1. Assistant Commissioner of State Tax v. Suncraft Energy Pvt. Ltd. ( Calcutta High Court ) Held: Input Tax Credit cannot be denied to the recipient merely because the supplier failed to discharge tax liability or was later found non-compliant. Ratio: A purchasing dealer cannot be expected to verify whether the supplier has deposited tax with the Government . Such interpretation would make ITC provisions unworkable. Relevance: Strong authority against mechanical ITC reversal under Section 16(2)(c). 2. D.Y. Beathel Enterprises v. State Tax Officer ( Madras High Court ) Held: Before denying ITC to the recipient, the department must first proceed against the defaulting supplier . Ratio: Without exhausting recovery from the supplier, ITC cannot be reversed from the bona fide purchaser. Relevance: Most-cited judgment in bogus billing / su...

Input Tax Credit Cannot Be Denied to Bona Fide Buyer Due to Supplier’s Bogus Billing & Retrospective GST Registration Cancellation – Legal Position, Case Laws & Remedies Introduction A recurring and high-stakes dispute under GST is denial of Input Tax Credit (ITC) to a genuine recipient merely because the supplier’s GST registration is cancelled retrospectively on allegations of bogus billing / fake invoicing. In many cases: The recipient purchased goods or availed services in the normal course of business Full payment including GST was made through banking channels ITC is reflected in GSTR-2A / GSTR-2B Later, the supplier’s registration is cancelled ab initio alleging fake billing The department issues a Show Cause Notice (SCN) proposing ITC reversal, interest and penalty This article explains: What the CGST Act, 2017 and Rules actually provide Whether ITC can be denied to a bona fide purchaser Supreme Court and High Court jurisprudence (in favour and against) Action steps to ...

Section 90 of CGST Act, 2017 – Liability of Members of Association of Persons (AOP) or Body of Individuals (BOI) Updated on: February 2026 (as applicable till date) Prepared by: Yours Tax Consultant 1. Objective of Section 90 Section 90 ensures that GST dues of an Association of Persons (AOP) or Body of Individuals (BOI) do not become irrecoverable due to lack of assets, dissolution, or cessation of activities. It fixes personal liability on members of such associations. 2. Statutory Provision – Section 90 Section 90: Where any association of persons or body of individuals is liable to pay any tax, interest or penalty under this Act, the association or body and every person who was a member thereof at the time when such tax was due shall be jointly and severally liable for the payment of such tax, interest or penalty. 3. Persons Covered under Section 90 Section 90 applies to: Association of Persons (AOP) Body of Individuals (BOI) Examples i...

Section 89 of CGST Act, 2017 – Liability of Partners of Firm to Pay Tax Updated on: February 2026 (as applicable till date) Prepared by: Yours Tax Consultant 1. Objective of Section 89 Section 89 ensures that GST dues of a partnership firm are not defeated by dissolution, retirement of partners or lack of assets in the firm. It fixes personal liability on partners for GST dues of the firm. 2. Statutory Provision – Section 89 Section 89(1): Notwithstanding anything contained in the Indian Partnership Act, 1932, where any firm is liable to pay any tax, interest or penalty under this Act, the firm and each of the partners of the firm shall be jointly and severally liable for such payment. Section 89(2): Where any partner retires from the firm, he or the firm shall intimate the Commissioner by a notice in writing within one month from the date of such retirement, and where such intimation is given, the retired partner shall not be liable for any tax, interest...

Section 88 of CGST Act, 2017 – Liability of Directors of Private Company Updated on: February 2026 (as applicable till date) Prepared by: Yours Tax Consultant 1. Objective of Section 88 Section 88 prevents evasion of GST dues by private companies through closure, liquidation or asset depletion. It makes directors personally liable for unpaid GST dues of the private company under specified circumstances. 2. Statutory Provision – Section 88 Section 88(1): Where any tax due from a private company in respect of any supply of goods or services or both, for any period, cannot be recovered, then, every person who was a director of such company during such period shall be jointly and severally liable for the payment of such tax, unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. Section 88(2): Where a private company is converted into a public company...

Section 87 of CGST Act, 2017 – Liability in Case of Company in Liquidation Updated on: February 2026 (as applicable till date) Prepared by: Yours Tax Consultant 1. Objective of Section 87 Section 87 ensures that GST dues are properly accounted for and recovered when a company goes into liquidation. It casts specific statutory obligations on the liquidator and fixes liability in respect of tax dues of the company. 2. Statutory Provision – Section 87 Section 87(1): Where any company is being wound up whether under the orders of a court or tribunal or otherwise, the liquidator shall, within 30 days of his appointment, give intimation of his appointment to the Commissioner. Section 87(2): The Commissioner shall, after making such inquiry or calling for such information as he may deem fit, notify the liquidator within three months from the date of receipt of such intimation, the amount which in his opinion would be sufficient to provide for any tax, interest ...

Section 86 of CGST Act, 2017 – Liability in Case of Amalgamation or Merger of Companies Updated on: February 2026 (as applicable till date) Prepared by: Yours Tax Consultant 1. Objective of Section 86 Section 86 ensures that GST liabilities do not lapse when two or more companies are amalgamated or merged. It fixes responsibility on the amalgamated or resulting company for tax dues of the transferor companies. 2. Statutory Provision – Section 86 Section 86: Where two or more companies are amalgamated or merged in pursuance of an order of a court or tribunal or otherwise, the amalgamated or resulting company shall be liable to pay any tax, interest or penalty due from the transferor companies up to the date of such amalgamation or merger, whether such dues are determined before or after the amalgamation or merger. 3. Key Elements of Section 86 Applies only to companies Requires amalgamation or merger Liability is statuto...

Section 85 of CGST Act, 2017 – Liability in Case of Transfer of Business Updated on: February 2026 (as applicable till date) Prepared by: Yours Tax Consultant 1. Objective of Section 85 Section 85 ensures that GST liabilities do not escape when a business is transferred by way of sale, gift, lease, merger or any other mode. It fixes responsibility on both the transferor and transferee for past GST dues. 2. Statutory Provision – Section 85 Section 85(1): Where a taxable person transfers his business in whole or in part, by sale, gift, lease, leave and licence, hire or in any other manner whatsoever, the taxable person and the person to whom the business is transferred shall, jointly and severally, be liable to pay any tax, interest or penalty due from the taxable person up to the time of such transfer, whether such dues are determined before or after the transfer. Section 85(2): Where the transferee carries on the business under a new name, the transferor sh...

Section 84 of CGST Act, 2017 – Continuation and Validation of Recovery Proceedings Updated on: February 2026 (as applicable till date) Prepared by: Yours Tax Consultant 1. Purpose of Section 84 Section 84 ensures that recovery proceedings already initiated do not automatically fail when the original demand order is modified, varied, or set aside in appeal or revision. It avoids the need to start fresh recovery proceedings every time. 2. Statutory Provision – Section 84 Section 84: Where any notice of demand in respect of any tax, penalty, interest or any other amount payable under this Act is served upon a person, and any appeal or other proceedings is filed or initiated against such demand, then— where such demand is modified in such appeal or proceedings, the recovery proceedings, if any, initiated, shall continue to be valid but shall be limited to the amount so modified; where such demand is set aside in such appeal or p...

Section 83 of CGST Act, 2017 – Provisional Attachment to Protect Revenue Updated on: February 2026 (as applicable till date) Prepared by: Yours Tax Consultant 1. Objective of Section 83 Section 83 empowers the GST authorities to provisionally attach property , including bank accounts, during the pendency of certain proceedings to protect the interest of revenue . This is a preventive measure, not a recovery mechanism. 2. Statutory Provision – Section 83 Section 83(1): Where, during the pendency of any proceedings under sections 62, 63, 64, 67, 73 or 74 , the Commissioner is of the opinion that for the purpose of protecting the interest of revenue, it is necessary so to do, he may, by order in writing, attach provisionally any property, including bank account, belonging to the taxable person or any person specified in section 122(1A). Section 83(2): Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the...

Section 82 of CGST Act, 2017 – Tax to be First Charge on Property Updated on: February 2026 (as applicable till date) Prepared by: Yours Tax Consultant 1. Objective of Section 82 Section 82 creates a statutory first charge in favour of the Government on the property of a taxable person for recovery of GST dues. Its purpose is to give priority to Government dues over other claims, subject to certain legal exceptions. 2. Statutory Provision – Section 82 Section 82: Notwithstanding anything to the contrary contained in any law for the time being in force, any amount payable by a taxable person or any other person on account of tax, interest or penalty which he is liable to pay to the Government shall be a first charge on the property of such taxable person or such person. Provided that nothing contained in this section shall affect any proceedings under the Insolvency and Bankruptcy Code, 2016. 3. Meaning of “First Charge” First charge means: Gov...

Section 81 of CGST Act, 2017 – Transfer of Property to be Void in Certain Cases Updated on: February 2026 (as applicable till date) Prepared by: Yours Tax Consultant 1. Objective of Section 81 Section 81 is an anti-evasion and revenue protection provision . Its purpose is to prevent taxpayers from transferring or disposing of property with the intention of defeating recovery of GST dues . It ensures that Government dues are not frustrated by artificial or sham transfers. 2. Statutory Provision – Section 81 Section 81: Where a person, after any amount has become due from him under this Act, creates a charge on or parts with the property belonging to him or transfers the property with the intention of defrauding the Government revenue, such charge or transfer shall be void as against any claim in respect of such tax or other sum payable. 3. When Does Section 81 Apply? Section 81 applies only when all conditions below are satisfied: GST dues have alr...

  Section 74 GST SCN That Only States Figures Without Allegations of Fraud/Suppression: Supreme Court Grants Stay Introduction The Supreme Court of India has intervened in a GST dispute, granting an interim stay on further proceedings arising from a GST Show Cause Notice (SCN) issued under Section 74 of the CGST Act, 2017 because the notice only contained numerical figures and did not set out specific allegations of fraud, wilful misstatement, or suppression of facts — the essential foundation for invoking Section 74. This decision clarifies that mere tabulation of figures without factual narrative is prima facie defective and unsustainable for the purposes of extended limitation and penalty under Section 74. What is Section 74 of the CGST Act? Section 74 deals with cases where: Tax has not been paid or has been short paid, Input Tax Credit (ITC) has been wrongly availed or utilised, “by reason of fraud, wilful misstatement or suppression of facts to evade tax...