The author would like share his inference drawn on Case: Neeyamo Enterprise Solutions Pvt. Ltd. vs. CTO (Madurai), Madras High Court (Madurai Bench) – Order dated 11.11.2025 (W.P.(MD) Nos. 30453 to 30458 of 2024). This represents Section 74 of CGST Act dealing with non-payment/ short payment due to fraud, willful misstatement, suppression.
Here, although the GST remained unpaid, linkage between non-payment and aforementioned triggers of Section 74 was not established by the Revenue Authorities.
In the absence of such cogent justification either in the notice or the final order, the Court rightfully quashed all the orders for financial years 2018-19 to 2022-23 and for the period of April 2023 to August 2023. The Madras HC also reiterated that Section 74 cannot be used mechanically during inspections and also that Section 74 can be imposed only when the statutory pre-condition fraud, willful misstatement, or suppression of facts is fulfilled.
Furthermore, another undisputed aspect of judicial precedent is that the Revenue pressed that if the Authority can proceed against the Tax payer under Section 73 for the remaining years. This right of Revenue was granted by the Court. Here, the Revenue wisely argued that when order passed by the Authority is bad-in-law, the same is to be quashed. The Order can only be set aside either for non-adherence to procedural formalities or on account of the absence of Jurisdictional facts. When such orders are set aside – the Court has to remand the matter back to the Revenue Authorities.
Accordingly, for the Tax payer – it becomes vital to win the case on Factual grounds instead of on such Technical point. As seen in this case – the courts provide liberty to the Department to proceed with the assessment for the years where time window for Section 73 is still open.
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