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...

  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...

Section 74 of CGST Act, 2017 – Determination of Tax Not Paid or Short Paid (Fraud, Wilful Misstatement or Suppression) Updated on: February 2026 (as applicable till date) Prepared by: Yours Tax Consultant 1. Objective of Section 74 Section 74 provides the mechanism for determination and recovery of tax where non-payment or short-payment of tax, wrong refund or wrongful availment of ITC has occurred by reason of fraud, wilful misstatement or suppression of facts with intent to evade tax. This section applies only in cases involving mens rea (intent) . 2. When Section 74 Applies Section 74 is invoked in cases such as: Issuance of fake or bogus invoices Claim of ITC without actual supply Suppression of taxable turnover Collection of tax without payment to Government Deliberate misclassification or undervaluation Genuine mistakes or interpretational issues are excluded. 3. Statutory Provision – Section 74 (Overview) Where it appears to ...

  Introduction Under the GST law, demand proceedings must strictly follow the principles of natural justice . However, many taxpayers are facing situations where GST DRC-07 is issued directly without serving a proper Show Cause Notice (SCN) . Such actions are illegal and unsustainable in law. This article explains: Whether GST DRC-07 can be issued without SCN Relevant legal provisions under GST Important High Court case laws Remedies available to taxpayers Practical appeal grounds & formats What is GST DRC-07? GST DRC-07 is a summary of demand issued under Rule 142(5) of CGST Rules, 2017 . It is issued only after passing a valid adjudication order under: Section 73 (non-fraud cases), or Section 74 (fraud / suppression cases) 📌 DRC-07 is not a substitute for SCN. It is only a consequence of a valid adjudication order. Is Show Cause Notice Mandatory Before DRC-07? Yes. Issuance of SCN is mandatory . Statutory Provisions Section 73(1...