Tax / Indirect Tax : Meritless Review Petition in cases related to CGST Act, 2017 Dismissed Explaining S.37 of CGST Act, 2017 and Principles of Penalty

Tax / Indirect Tax : Meritless Review Petition in cases related to CGST Act, 2017 Dismissed Explaining S. 37 of CGST Act, 2017 and the Principles of Penalty

In case of Sriba Nirman Company v. Commissioner (Appeals) [2025] GCtR 1774 (SC), the review petition was dismissed and the review petition was found to be meritless.

In the Judgment under challenge it was observed that Section 37 of the CGST Act, which is in pari materia with the corresponding provision under the APGST and IGST Act, read with Sections 38 and 39, stipulates that every registered person, is required to furnish a return electronically of inward and outward supplies of goods and services or both, input tax credit available, tax payable, tax paid, and such other particulars, in the prescribed format, for every calendar month or part thereof, within 10 days of the expiry of the said month. Section 44 also requires an annual return to be filed by every registered person, within such time and format as may be prescribed. The prescribed time, for the purpose of this case, would be till 07,02.2020. The differentiation, between invocation of Section 73 and the invocation of section 74, is on the basis of the circumstances in which such tax has not been paid. Section 74 is to be invoked where non-payment of tax occurs on account of fraud, wilful misstatement or suppression of facts for the purpose of evading tax. Where non-payment or short payment is for reasons other than the aforesaid reasons set out under Section 74, the provisions of Section 73 of the GST Act would be applicable.

Non-payment of tax, would attract penalties, under Section 74 (1), in three circumstances. The first two circumstances are fraud and wilful mis statement. Both these require an intention to evade tax by unfair or illegal means. The third circumstance is suppression of fact, which is also defined, in Explanation-2, as non-declaration of relevant information. In view of the collocation of the terms, before this term, and in view of the requirement, under the two earlier terms of mens rea, the term “suppression of facts” would have to be read as wilful or deliberate suppression of fact, for evading tax. The term “evade” puts this issue beyond controversy, as this term means that the suppression must be for the purpose of evasion, which clearly requires intention and mens rea.