Facts of the Case:

In this case, the petitioner was engaged in works contract. For FY 2018–19, the GST department issued a show cause notice on 31.01.2024 under Section 73, alleging a mismatch between turnover reported in GSTR-3B and the income reflected in Form 26AS of the petitioner (as per Income Tax Department data). The notice was uploaded in the “Additional Notice and Order” tab on the GST portal. The petitioner claimed that due to this, he had no knowledge of the notice, and therefore could not file a reply. An ex parte order dated 28.04.2024 was passed, imposing tax, interest, and penalty.

The petitioner filed an appeal along with a delay condonation application. The appellate authority, however, dismissed the appeal on 21.01.2025 without addressing the evidence or grounds raised.

The petitioner argued that the amounts reflected in Form 26AS relate to works executed during A.Y. 2015–16 and 2016–17, i.e., prior to GST implementation (VAT regime). Payments were received later, but the works were fully executed under VAT. Since no supply was made in the GST regime, the GST authorities lacked jurisdiction to levy tax, interest or penalty under the GST Act.

The Court summoned original work orders and records, which clearly showed that the contracts were executed during the VAT regime. Despite this, the GST authorities initiated proceedings solely on the basis of mismatch between GSTR-3B and Form 26AS, without verifying the nature or period of the supply.

Issue: Whether GST authorities can initiate proceedings under Section 73 to levy GST on payments received post-GST for works completed entirely during the VAT regime? Whether mismatch between GSTR-3B and Form 26AS is sufficient to confer jurisdiction under GST without verifying if the income relates to the pre-GST period?

Held that:

The Court held that merely because consideration was received after 01.07.2017, GST does not become applicable when the actual supply (execution of works) occurred before implementation of GST. Since the supply took place in 2015–16 and 2016–17 under VAT, the GST authorities had no jurisdiction under Section 73 to demand GST, interest, or penalty.

A mismatch does not automatically establish liability under GST. The department must verify the nature and timing of the supply, especially when documentary evidence from the contracting authority suggests otherwise. The department should have consulted the VAT assessing authority or sought records from the Jal Nigam before initiating GST proceedings. Proceeding solely on Form 26AS was held to be arbitrary.

Further, the State could not point to any provision authorizing the levy of GST on receipts pertaining to pre-GST supplies. The Court held that the GST authorities had exceeded their jurisdiction, rendering the Section 73 notice, the ex parte order dated 28.04.2024, and the appellate order dated 21.01.2025 illegal and unsustainable.

All impugned orders were quashed. Any amount deposited by the petitioner must be refunded with interest from date of deposit to date of actual payment within one month.

Case Name:  M/s Vimlesh Kumar Contractor Versus State of U.P. and 3 Others dated 17.11.2025

To read the complete judgement 2025 Taxo.online 2967