M/S Singh Electrical Store vs. Superintendent CGST And Central Excise, Range Azamgarh, Division
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The petitioner, M/s Singh Electrical Store, filed a writ petition before the Allahabad High Court challenging an order dated February 21, 2025, passed by the Superintendent, CGST and Central Excise, Range Azamgarh. The impugned order was passed under Section 74 of the Central Goods and Services Tax Act, 2017. The petitioner argued that the excess claim was due to a clerical error and not intentional, and therefore, the case should have been considered under Section 73 of the CGST Act, 2017, not Section 74. The respondent authority, in its order, stated that it was not appropriate to deal with this aspect at the adjudication level, as the jurisdiction lay with the appellate authority.
Held
The Court held that Section 74 of the CGST Act, 2017, has a mandatory requirement of fraud or any willful-misstatement and/or suppression of material facts. The Court found that the respondent authority had not applied its mind to this essential ingredient of Section 74. The statement in the impugned order that it was not appropriate to deal with the aspect of whether the case fell under Section 73 or 74 at the adjudication level was considered a non-application of mind. Consequently, the Court quashed and set aside the impugned order dated February 21, 2025. It directed the respondent authority to grant an opportunity of hearing to the petitioner and thereafter pass a reasoned order within twelve weeks. The Court also directed the Commissioner, Central Goods and Services Tax, Varanasi, to look into the issue of officers passing orders under Section 74 without providing reasons for invoking it.
Key Issues
1. Whether the respondent authority erred in passing an order under Section 74 of the CGST Act, 2017, without addressing the petitioner's contention that the excess claim was a clerical error and not due to fraud or willful misstatement, as required by Section 74? Petitioner's Argument: The petitioner contended that Section 74 of the CGST Act, 2017, mandates the presence of fraud, willful-misstatement, or suppression of material facts. They argued that their excess claim was a mere clerical error and not intentional, thus not falling under the purview of Section 74. They asserted that the matter should have been dealt with under Section 73 of the Act. Respondent's Argument: The respondent authority, in its impugned order, did not provide specific arguments but stated that it was not appropriate to deal with the petitioner's claim regarding the classification under Section 73 or 74 at the adjudication level, suggesting that such a determination lay with the appellate authority.
Sections Cited
Section 74, Section 73, Section 75
AI-generated summary — verify with the full judgment below
Neutral Citation No. - 2025:AHC:37922-DB Court No. - 40 Case :- WRIT TAX No. - 1016 of 2025 Petitioner :- M/S Singh Electrical Store Respondent :- Superintendent Cgst And Central Excise, Range Azamgarh, Division Counsel for Petitioner :- Prakhar Saran Srivastava Counsel for Respondent :- Parv Agarwal Hon'ble Shekhar B. Saraf,J. Hon'ble Kshitij Shailendra,J.
Heard Sri Prakhar Saran Srivastava, learned counsel appearing on behalf of the petitioner and Sri Parv Agarwal, learned counsel appearing on behalf of the respondent.
This is a writ petition under Article 226 of the Constitution of India wherein the writ petitioner is aggrieved by the order dated February 21, 2025 (Ref. No.ZD0902252997022) passed by the respondent under Section 74 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the 'Act').
Upon a perusal of the impugned order, we are of the view that the respondent authority has not applied his mind and has come to the following finding :- "5.2 However, they argued that the said excess claim was on account of clerical error and not intentional. They contended at length as to why their case not covered under section 74 but under section 73 of the CGST Act, 2017. Since the juri iction to consider such claim lies with the appellate authority and above in terms of section 75, I do not find it appropriate to deal on this aspect at the level of adjudication."
It is trite law that to be covered under Section 74 of the Act, there is a mandatory requirement of there being fraud or any willful-misstatement and/or suppression of material facts. This being an essential ingredient of the particular section, the authority concerned could not have made the statement in the impugned order that it was not appropriate for him to deal on this aspect at his level of adjudication.
We are indeed surprised at the reasoning or rather for non reasoning of the authority concerned. In fact, there appears to be complete non application of mind which leads us to intervene in this matter at this stage. Accordingly, we direct the Commissioner, Central Goods and Services Tax, Varanasi to look into this particular issue wherein officers are passing orders under Section 74 of the Act without providing the reasons for invoking Section 74 of the Act for fraud or any willful-misstatement or suppression of material facts. Commissioner, Central Goods and Services Tax, Varansi is directed to take appropriate action at his end.
In light of the observation made above, the impugned order dated February 21, 2025 is quashed and set aside with a direction upon the authority concerned to grant an opportunity of hearing to the petitioner, and thereafter, pass a reasoned order within a period of twelve weeks from date.
With the above directions, the writ petition is allowed.
A copy of this order be communicated by Registrar (Compliance) of this Court to Commissioner, Central Goods and Services Tax, Varansi. Order Date :- 17.3.2025 Dev (Kshitij Shailendra,J.) (Shekhar B. Saraf,J.) DEV PRAKASH High Court of Judicature at Allahabad
Reproduced from the public record of the Allahabad High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.