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2024 (12) TMI 572 - HC - GSTTax discrepancies - mismatch between GSTR-3B and GSTR-1 - applicability of Section 74 of the CGST Act, 2017 - HELD THAT - Prima facie, it is doubted how the provisions of Section 74 of the Central Goods Services Tax Act, 2017 would stand attracted on a mere allegation of a mismatch between GSTR-3B and GSTR-1. This is noted since the said provision would itself be liable to be invoked only if it be alleged that a case of fraud, wilful misstatement or suppression of facts is made out. The matter requires consideration. It is provided that while it shall be open for the respondents to proceed further with the impugned Show Cause Notice, any final orders, if passed, shall not be given effect to till the next date of hearing - Let the matter be called again on 16.12.2024.
Issues: Allegations of tax discrepancies and applicability of Section 74 of the CGST Act, 2017.
In this judgment, the High Court addressed the allegations made by the respondents regarding tax discrepancies against the writ petitioner. The respondents alleged discrepancies in the tax liabilities declared in GSTR-3B and GSTR-1, as well as differences in availed Input Tax Credit (ITC) and IGST amounts for the financial year 2017-18. The respondents claimed that the petitioner had not submitted relevant documents despite multiple opportunities, leading to a mismatch in tax declarations. The Court noted the allegations but expressed doubt on the applicability of Section 74 of the CGST Act, 2017 solely based on these discrepancies, as Section 74 is invoked in cases of fraud, wilful misstatement, or suppression of facts. The Court decided to allow the respondents to proceed with the Show Cause Notice but ordered that any final orders should not be implemented until the next hearing on 16.12.2024. The Court emphasized the need for further consideration on how Section 74 of the CGST Act, 2017 would be applicable in this scenario, highlighting that mere discrepancies in tax declarations may not automatically trigger the provisions of Section 74 without evidence of fraud or wilful misstatement. The Court granted the respondents the opportunity to respond to the allegations and directed the petitioner to file a rejoinder affidavit within a specified timeline. The Court acknowledged the submissions made by the petitioner's counsel regarding the ongoing inquiry and responses provided by the petitioner to the initial notice and detailed reply. The Court scheduled the next hearing to delve deeper into the matter and evaluate the applicability of Section 74 in light of the allegations raised by the respondents. Overall, the judgment reflects the Court's cautious approach in assessing the allegations of tax discrepancies and the potential application of Section 74 of the CGST Act, 2017. The Court allowed the legal process to continue but restrained the enforcement of any final orders until further examination at the next hearing. This case underscores the importance of establishing grounds for invoking specific legal provisions, such as Section 74, in tax-related matters to ensure a fair and thorough evaluation of the allegations raised by the tax authorities.
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