Facts of the Case:

In this case, the petitioner challenged Order-in-Original , whereby the adjudicating authority confirmed demands arising from three separate show cause notices. The first notice, issued under Section 74, related to differences between GSTR-1 and GSTR-3B for the period from March 2018 to March 2019 and imposed a 100% penalty. The remaining two notices, issued under Section 73, related to differences between GSTR-1 and GSTR-3B for later periods and alleged wrongful availment of ITC.

The petitioner contended that although outward supplies had been correctly disclosed in GSTR-1, the corresponding tax could not be reported and paid through GSTR-3B on time because several customers had not made payment for the supplies. It was argued that there was no suppression of facts or intention to evade tax since the outward supplies had already been disclosed to the Department through GSTR-1 and the tax liability was discharged as and when payments were received. The petitioner further argued that, for identical defaults during subsequent periods, the Department had itself invoked Section 73, demonstrating that the earlier invocation of Section 74 was unjustified.

The Revenue, however, maintained that the petitioner had deliberately collected GST from customers, failed to remit it to the Government, and suppressed taxable receipts by not filing GSTR-3B returns in time, thereby justifying proceedings under Section 74 and the consequential penalty.

Issue:

Whether proceedings initiated under Section 74 for non-payment of GST despite disclosure of outward supplies in GSTR-1, but delayed filing of GSTR-3B, warranted interference, particularly in view of the subsequent introduction of Section 128A providing amnesty for cases covered under Section 73.

Held That:

The Court took note of the subsequent legislative development whereby Section 128A, inserted by the Finance (No. 2) Act, 2024, introduced an amnesty scheme for demands raised under Section 73. The Court observed that the deliberations of the GST Council preceding the introduction of Section 128A acknowledged the practical difficulties and system-related glitches that had resulted in delayed filing of returns and short payment of admitted tax liabilities.

Considering that the petitioner’s case involved admitted outward supplies already reflected in GSTR-1 and that similar defaults for subsequent periods had been dealt with under Section 73, the Court held that the petitioner’s case deserved reconsideration under the framework of Section 73. Consequently, while not declaring the original invocation of Section 74 as illegal, the Court quashed the impugned order and remitted the matter to the adjudicating authority for fresh consideration in the light of Section 73 and the legislative intent underlying Section 128A.

Case Name: Zyvana Integrated Services (P.) Ltd. v. Additional Commissioner of GST and Central Excise dated 08.06.2026

To read the complete Judgement 2026 Taxo.online 1798