2025 (3) TMI 110 - HC - GST

Challenge to order passed by the respondent under Section 74 of the State Goods and Services Tax Act 2017 - HELD THAT - A bare look at the show cause notice dated 12.10.2022 reveals that only indication made is that for the period in question the difference between GST DRC-01 and GST-3B was Rs. 13, 55, 943.00/- and that no response to notice under Section 61 of the Act was given and therefore the petitioner must deposit a sum of Rs. 13, 55, 943.00/- as tax along with interest and penalty. The petitioner deposited the tax whereafter the order impugned under Section 74 of the Act has been passed demanding interest and penalty. For invoking Section 74 of the Act the allegations pertaining to suppression etc. are sine qua non in absence thereof the jurisdiction under Section 74 of the Act itself cannot be invoked by the authorities. The order impugned dated 16.03.2024 passed by respondent no. 2 demanding interest and penalty from the petitioner invoking provisions of Section 74 of the Act cannot be invoked - Petition allowed.

Summary

The High Court of Allahabad considered a writ petition challenging an order passed by the respondent under Section 74 of the State Goods and Services Tax Act, 2017, demanding interest and penalty from the petitioner for the financial year 2017-18. The petitioner had received a show cause notice indicating a tax liability of Rs. 13,55,943.00, which was not deposited initially. Subsequently, the petitioner deposited the tax amount, but an order was issued demanding interest and penalty. The petitioner argued that the notice and order were without jurisdiction as there was no fraud, wilful misstatement, or suppression of facts on their part. The petitioner also contended that the order was time-barred. The respondents argued that the notice and order were justified due to the deliberate non-deposit of the tax liability by the petitioner.The Court examined the submissions and the record, noting that the show cause notice did not allege any fraud, wilful misstatement, or suppression of facts as required under Section 74 of the Act. The Court emphasized that for Section 74 to be invoked, allegations of suppression were essential, which were absent in this case. Therefore, the Court concluded that the order demanding interest and penalty under Section 74 could not be sustained. Consequently, the petition was allowed, and the impugned order was quashed and set aside.In summary, the key issues considered and addressed in the judgment were the jurisdictional requirements for invoking Section 74 of the Act, the absence of allegations of suppression in the show cause notice and order, and the bar of limitation. The Court's analysis focused on the legal framework of Section 74, the lack of essential ingredients in the notice and order, and the ultimate conclusion that the order demanding interest and penalty was unsustainable.