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2025 (3) TMI 1304 - HC - GSTChallenge to impugned orders issued u/s 74 of the Central Goods and Services Tax Act 2017 - suppression of facts or not - HELD THAT - The SCN were issued under Section 74 of the Act. A perusal of the notice it appears that no aspect of suppression of facts wilful misstatement or fraud has been stated in the show cause notices to fulfil the ingredient of Section 74 of the Act and therefore the same is not sustainable under the Provision of Section 74 of the Act. However the 1st respondent proceeded to pass the impugned orders. The main grievance of the petitioner is that since the impugned orders were passed under Section 74 of the Act it deprives the petitioner s right in availing the benefit under the Amnesty Scheme. Therefore as suggested by the learned Special Government Pleader it would be proper to say that the notice issued under Section 74 of the Act shall be deemed as notice under Section 73 of the Act so as to enable the petitioner to avail the benefits under the Amnesty Scheme. Accordingly the notices and the impugned orders passed under Section 74 of the Act shall be deemed as the notices and orders passed under Section 73 of the Act. Petition disposed off.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are: 1. Whether the invocation of Section 74 of the Central Goods and Services Tax Act, 2017, was appropriate given the circumstances of the case. 2. Whether the petitioner is entitled to the benefits of the Amnesty Scheme under Section 128A of the CGST/TNGST Act, 2017. ISSUE-WISE DETAILED ANALYSIS Issue 1: Invocation of Section 74 of the CGST Act Relevant Legal Framework and Precedents: Section 74 of the Central Goods and Services Tax Act, 2017, applies in cases where there is an allegation of suppression of facts, willful misstatement, or fraud with the intent to evade tax. Section 73, on the other hand, deals with tax determination without such allegations. Court's Interpretation and Reasoning: The Court examined the show cause notices issued to the petitioner and found that they did not contain any allegations of suppression, misstatement, or fraud necessary to invoke Section 74. The absence of these allegations meant that the conditions for applying Section 74 were not met. Key Evidence and Findings: The show cause notices and the impugned assessment orders were scrutinized. The Court noted that the petitioner had already paid the entire tax amount, which was declared in GSTR-9/9C, and there was no evidence of intent to evade tax. Application of Law to Facts: Since the show cause notices lacked the necessary allegations to justify the invocation of Section 74, the Court concluded that the orders should not have been issued under this section. Treatment of Competing Arguments: The respondent's counsel acknowledged the lack of jurisdiction to reclassify the proceedings from Section 74 to Section 73 but agreed that if the Court deemed it appropriate, the matter could be reconsidered to allow the petitioner to benefit from the Amnesty Scheme. Conclusions: The Court determined that the invocation of Section 74 was inappropriate and that the notices and orders should be deemed as issued under Section 73. Issue 2: Entitlement to Amnesty Scheme Benefits Relevant Legal Framework and Precedents: Section 128A of the CGST/TNGST Act, 2017, outlines the Amnesty Scheme, which provides for the waiver of interest and penalties in certain cases where the tax has been fully paid before a notified date. Court's Interpretation and Reasoning: The Court recognized that the petitioner was deprived of the Amnesty Scheme benefits due to the incorrect application of Section 74. By reclassifying the notices under Section 73, the petitioner could potentially qualify for these benefits. Key Evidence and Findings: The petitioner had paid the full tax amount before the inspection, which was a critical factor in considering eligibility for the Amnesty Scheme. Application of Law to Facts: The Court's decision to treat the notices and orders as issued under Section 73 enabled the petitioner to seek Amnesty Scheme benefits, as the conditions under Section 74 were not met. Treatment of Competing Arguments: The respondent's counsel did not contest the potential for the Court to reclassify the proceedings, acknowledging the possibility of reconsideration to allow the petitioner to benefit from the Amnesty Scheme. Conclusions: The Court facilitated the petitioner's access to the Amnesty Scheme by reclassifying the notices and orders under Section 73. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: "A perusal of the notice, it appears that no aspect of suppression of facts, wilful misstatement or fraud has been stated in the show cause notices to fulfil the ingredient of Section 74 of the Act and therefore, the same is not sustainable under the Provision of Section 74 of the Act." Core Principles Established: The Court established that for Section 74 to be invoked, there must be clear allegations of suppression, misstatement, or fraud. Absent these, Section 73 should be applied. Final Determinations on Each Issue: The Court concluded that the notices and orders issued under Section 74 should be deemed as issued under Section 73, thus allowing the petitioner to avail of the Amnesty Scheme benefits.
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