GST / Indirect Tax : HC Quashes the SCN and the Order passed under S.74 of GST Act, 2017

GST / Indirect Tax : HC Quashes the SCN and the Order passed under S.74 of GST Act, 2017

It was held in Shubhangi Gupta v. State of UP [2025] GCtR 1570 (Allahabad) in context of S.74 of UP GST Act, 2017 that it is inherent that proceedings cannot be initiated against a person who is deceased. Thus, proceedings cannot be initiated against the legal heirs of the deceased or against the estate of the deceased. However, it was open to the authorities to proceed in proper manner against the legal representative/heirs of the deceased proprietor and having failed to do so, the entire proceedings initiated from the stage of show cause notice is bad in law. 

In this case, the proceedings under S.74 of UP GST Act, 2017 were quashed.

GST / Indirect Tax : Consequences of Opting out of Composition Scheme

GST / Indirect Tax : Consequences of Opting out of Composition Scheme

Hon'ble J. Piyush Agrawal is considered one of the most upright Judges of Allahabad High Court. In the case of Poddar Electronics Security v. Commissioner [2025] GCtR 1568 (Allahabad) it was held that once a person chose in his wisdom neither to file any response even to the show cause notice nor appear before the proper officer then action taken against such person by Tax Department cannot be said to be illegal. The writ petition was dismissed.

The record shown that intimation about petitioner opted out of composition scheme has not been reversed by any order/ direction of the competent Court. Further nothing has been brought on record showing that the petitioner is still under the composition tax payer and not the regular tax payer.  

No material has been brought on record by the petitioner that after getting the said information, what action has been taken by the petitioner for challenging the said intimation. Even no material has been brought on record showing objection to the notice issued for non depositing the tax and filing of return, therefore, the order dated 26.11.2018 which was was passed against which an appeal has been filed in which for the first time the petitioner raised an objection that he never opted out of composition scheme. 

Background Facts of this Particular Case

The brief background of this case given by petitioner in his petition was that he was registered under the VAT Act and after commencement of the new tax regime of GST, he migrated into the GST regime as under the composition tax payer, thus status of the petitioner on the dash board was showing as composition tax payer but all of sudden from 6.10.2017, the status of the petitioner was changed from composition tax payer to regular tax payer and on noticing the said fact, the petitioner sent an email in this respect to the GST department on 06.11.2017 and thereafter reminders were also sent on various dates. He submits that on 14.3.2018, the petitioner sent an email to CBEC, GST Council to which a reply was received admitting that the petitioner has not opted out of composition scheme but due to technical issue, the petitioner is being shown as regular tax payer instead of composition tax payer. He further submitted that again an email was received by the petitioner on 21.3.2018, stating that “ Dear Tax payer, Your Issue has been resolved. Please try submitting your favour now. Please share screen shot and problem description if issue still persists. Thanks, Team GSTN” to which the petitioner has again sent an email on 11.4.2018 that the issue still persists. Petitioner was surprised to receive an email on 16.4.2018 stating therein that the petitioner opted out of composition scheme on 3.11.2017, therefore, notice was issued for filing of return and thereafter the order has been passed on 26.11.2018 holding that the petitioner have neither deposited the tax nor filed the returns. Against the said order, the petitioner has filed an appeal in which the petitioner has taken a plea that he never opted out of composition scheme and the petitioner has wrongly been shown as regular tax payer instead of composition tax payer, therefore, the petitioner was not required to file the returns.  Petitioner argued that order under challenge has been passed without adverting the submissions made by the petitioner. He further submits that once the issue raised and pressed before the authority, it was the duty of the first appellate authority to decide the issue. 

The record showed that while migrating from the old tax regime i.e. VAT to GST, the petitioner opted under the composition scheme and the petitioner was shown to be composition tax payer. Further an averment has been made in the writ petition that the petitioner from 6.10.2017 was shown as regular tax payer instead of composition tax payer. Much emphasis have been made by the petitioner that the petitioner never opted out of composition to which a specific provision has been prescribed under Rule 6 of CGST Rule. The record revealed that the petitioner was duly intimated on 16.4.2018 that the petitioner opted out composition on 3.11.2017 copy of which was annexed as Annexure No. 8 of this writ petition.  

GST / Indirect Tax : Appropriate Legal Remedy Against Tax Demand

GST / Indirect Tax : Appropriate Legal Remedy Against Tax Demand

There are various companies which openly flout the time limits contained in tax laws and then to avoid pre-deposit & statutory time-limits, invoke writ jurisdiction. In case of National Aluminium Co. Ltd v. Commissioner of Delhi GST [2025] GCtR 1567 (Delhi), the company invoked writ jurisdiction instead of filing appeal against Order of tax demand. HC directed the Company to invoke the remedy of appeal by making requisite pre-deposit.

In this case, it can be seen that despite clear mandate of law given in State of MP v. Ramkumar Choudhary [2024] GCtR 3099 (SC) where the consequences of causing delay in litigations were laid down, Hon'ble Delhi HC did not dismissed the writ petition and instead granted time till 31 October 2025 to the Company to file appeal. 

GST / Indirect Tax : Availing Excess ITC & Scope of Interference in Action taken under S.74 of CGST Act, 2017

GST / Indirect Tax : Availing Excess ITC & Scope of Interference in Action taken under S.74 of CGST Act, 2017 

In the recent case of Chetak Motors Pvt Ltd v. Additional Commissioner [2025] GCtR 1566 (Delhi), the Department has issued Show cause notice under S. 74 of the CGST Act, 2017 against M where allegations of excess availment of ITC was made. M argued that S.74 cannot be invoked because there is no fraud or wilful misstatement or suppression of facts. The action of Department in this case was found not liable to interference under A.226. 

Department has alleged that M's non disclosure of the material facts in their GST returns appear to be wilful and intentional because noticee have failed to explain the reason of non-disclosure during investigation. Further, M (noticee) have acted upon a meticulously designed but nefarious plan and thereby indulged himself with mensrea, in the evasion of GST liabilities.

Some aspects relevant for S.74 of CGST Act, 2017 are as follows : 

(A) Tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed ;

(B) Notice on the person chargeable with tax ;

(C) Amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice ;

(D) S.74 (5) operates before service of notice ; Tax + interest + 15% penalty ;

(E) S. 75 (8) says on payment of Tax + Interest + Penalty (25% of tax) in 30 days from date of notice, proceedings wrt said notice become concluded.

Allegedly Wrongly Availing ITC and a Case of Incorrect GSTN : Tax Department's Order Set Aside

 Allegedly Wrongly Availing ITC and a Case of Incorrect GSTN : Tax Department's Order Set Aside

In a recent case, the Order passed by Tax Department has been set aside.

Invoices for the products purchased from Z were raised by Z on the Petitioner, however, the said invoices inadvertently reflected the Bombay address and Bombay GSTN of the Petitioner, instead of the Delhi GSTN number. 

Argument raised was incorrect reflection of Petitioner's Bombay GSTN on the invoices was merely an error by the supplier.

When the matter went into litigation, "on a direct query being put to the ld. Standing Counsel for the Respondent/Department, he fairly admits that no other entity has also claimed at the ITC on these purchases. The only basis for rejecting the ITC is the mention of the Bombay office GSTN instead of the Delhi office GSTN."

Tax Department's Order was set aside where the only basis for rejecting the ITC is the mention of the Bombay office GSTN instead of the Delhi office GSTN. Petitioner was found entitled to avail ITC.

🌏 For details, refer B Braun Medical India Pvt Ltd v. Union of India [2025] GCtR 716 (Delhi).

🌍 Also refer S.2(63) of CGST Act, 2017 which defines “input tax credit” means the credit of input tax. One may also refer S.2(59) of CGST Act, 2017 which defines “input” means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. One may also refer S.2(62) of CGST Act, 2017 which defines "input tax credit". One can refer A.300A of Constitution of India.

GST : "Suspension of GST Registration" : Order of GST Department Set Aside

GST : Suspension of GST Registration : Order of GST Department Set Aside

Section 41 (1) of CGST Act, 2017 deals with credit of input tax whereas Section 50 (1) of the CGST Act, 2017 deals with interest and the rate of interest. Section 69 (1) of CGST Act, 2017 deals with authorisation to arrest. Section 76 (1) of the CGST Act, 2017 deals with the amount representing the tax under CGST Act but which has not been paid to the Government. 

In a recent case citation [2023] GCtR 829, where the issue was related to GST registration, the Department's action to suspend the GST registration was challenged by way of a petition instead of treating the Department's official's action as the final word. By way of litigation, the Department's Order to suspend the petitioner's GST registration was set aside and the petition filed against the Tax Department was allowed. 

Written by 

Vishal

Delhi

Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made. All disputes shall be subject to Delhi Jurisdiction. Reproduction of judgment or publication of judgment unless expressly prohibited by Court according is not an infringement of copyright according to S. 52 (1)(q)(iv) of Copyright Act, 1957.

GST Refund : HC Allows the Petition Seeking Refund

 GST Refund : HC Allows the Petition Seeking Refund

Section 2 (17) of CGST Act, 2017 defines "business". Section 2 (74) of the CGST Act, 2017 defines "mixed supply". Section 22 (1) of the Act fixes an amount of Rs. 20 lacs. Section 29 deals with cancellation of registration.

In an interesting case citation [2019] GCtR 3119, the petition filed for refund of GST was allowed and the GST Department was directed to refund the amount to the petitioner.

Written by 

Vishal

Delhi

Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made. All disputes shall be subject to Delhi Jurisdiction. Reproduction of judgment or publication of judgment unless expressly prohibited by Court according is not an infringement of copyright according to S. 52 (1)(q)(iv) of Copyright Act, 1957.  

Delhi HC Directs GST Department to "File Counter Affidavit Within 4 weeks"

 There are many High Courts in India.

In a writ petition filed before Hon'ble Delhi High Court [Global Impex v CGST : WP(C) 4886/2021], when matter related to GST was listed on 2 June 2021, the Tax Department's Advocate had sent another Advocate to appear who requested "for accommodation". Even on 3 May 2021, the Tax Department's Advocate had sent another Advocate who again had requested "for accommodation".

Hon'ble High Court had noted in its Order dt. 2 June 2021 that "counter-affidavit will be filed in next four weeks".

You can get full text Order Free of Cost Without Any Payment/Subscription from www.delhihighcourt.nic.in

Vishal

Guwahati

Note : Above should Not be reproduced in newspapers/websites/thesis/law firms' newsletters/law journals without prior written permission. Fair use in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation towards the author irrespective of whether any profit is made by violator or not.