Facts of the Case:

The petitioner challenged both the adjudication order dated 08.12.2023, purportedly passed under Section 74 of the applicable GST enactments, and the subsequent order dated 06.01.2026 rejecting its application for waiver under Section 128A. The petitioner contended that the original show cause notice dated 29.09.2023 had been issued under Section 73 and nowhere alleged fraud, wilful misstatement, or suppression of facts with an intent to evade tax—essential ingredients for invoking Section 74. It was further pointed out that while the summary order described the adjudication as an order under Section 73, the detailed order referred to Section 74 and imposed a penalty equivalent to 100% of the tax. Owing to the characterization of the order as one under Section 74, the petitioner’s application seeking benefit under Section 128A was rejected on the ground that the provision is inapplicable to orders passed under Section 74.

Issue:

Whether an adjudication order could validly be passed under Section 74 when the show cause notice was issued under Section 73 and contained no allegations or findings of fraud, wilful misstatement, or suppression of facts with intent to evade tax, and consequently, whether rejection of the petitioner’s application under Section 128A was legally sustainable.

Held That:

The High Court held that the impugned proceedings were wrongly concluded under Section 74, as the show cause notice had unequivocally been issued under Section 73 and merely proposed reversal of excess Input Tax Credit based on a comparison between GSTR-3B and GSTR-2A. Neither the show cause notice nor the adjudication order contained any express or implied allegation or finding of fraud, wilful misstatement, or suppression of facts with intent to evade tax, which are indispensable conditions for invoking Section 74.

The Court further noted that the summary order itself was captioned as an order under Section 73, while the detailed order incorrectly invoked Section 74 and imposed a 100% penalty. Invoking Section 75(2) of the GST enactments, the Court concluded that the proceedings ought to have been initiated and concluded under Section 73. Consequently, the assessment order dated 08.12.2023 passed under Section 74 was set aside and the matter was remanded to the proper officer for passing a fresh order under Section 73. Since the rejection of the petitioner’s application under Section 128A was solely founded on the erroneous classification of the adjudication as one under Section 74, the rejection order dated 06.01.2026 was also quashed.

The Court further clarified that upon issuance of a fresh order under Section 73, the petitioner would be at liberty to submit a fresh application under Section 128A within the prescribed limitation period.

Case Name: Ms WFB BAIRD AND COMPANY INDIA PRIVATE LIMITED v. THE STATE TAX OFFICER-I & ORS. dated 07.07.2026

To read the complete judgement 2026 Taxo.online 1888