Sriba Nirman Company: When Non‑Filing Becomes “Wilful Suppression” – A Warning Bell for GST Taxpayers
Summary: The Andhra Pradesh High Court in M/s Sriba Nirman Company v. Commissioner (Appeals), Guntur held that prolonged non-filing of GSTR-3B returns and non-payment of GST, despite raising invoices and receiving payments, amounted to “wilful suppression” under Section 74 of the CGST Act, justifying a 100% penalty. The assessee, a works contractor, had raised invoices totaling about Rs.20.92 crore including GST during July 2017 to March 2020 but neither filed returns nor remitted tax to the Government. The firm argued that delayed payments from its client caused financial hardship, but the High Court rejected this defense, observing that GST liability arises from taxable supply and invoice issuance, not from receipt of payment. The Court held that collecting GST and failing to remit it while remaining outside the return system constituted suppression with intent to evade tax. The Supreme Court later dismissed the SLP and review petition, declining to interfere with the High Court ruling.
1. Case details and why this decision matters
High Court case:
Supreme Court case:
M/s. Sriba Nirman Company v. The Commissioner (Appeals), Guntur, Central Tax & Customs & Ors SLP(C) No. 14270 of 2025, Supreme Court of India, order dated 16‑05‑2025 (J.B. Pardiwala & R. Mahadevan JJ.).
What SC did:
The Supreme Court dismissed the SLP, saying it found “no good reason to interfere” with the Andhra Pradesh High Court’s order. Later even a review petition was dismissed.
This combination (High Court + Supreme Court SLP dismissal + review dismissal) means that the interpretation of section 74 adopted by AP High Court now carries strong persuasive value across India. For taxpayers, it is a serious warning that prolonged non‑filing and non‑payment can easily be treated as “wilful suppression” attracting 100% penalty under section 74.
2. Facts of the case in simple words
2.1 Who was the assessee?
M/s Sriba Nirman Company is a partnership firm acting as a works contractor.
It executed works for a government‑related body and raised invoices to its sole client (a single contractee) totalling about ₹20.92 crore including GST.
2.2 What did the firm actually do?
The firm raised invoices including GST, got payments from the client, but did not file monthly GST returns (GSTR‑3B) and did not pay GST to the Government.
This continued for a long period: roughly July 2017 to March 2020 (the initial years of GST).
The explanation later given by the firm was:
the client delayed payments or did not release full dues,
therefore, there was “no money” to pay tax.
In simple terms: they were collecting GST on invoices, receiving substantial payments, but neither filing returns nor paying the tax.
2.3 Department’s action
Department initiated proceedings and invoked section 74 (fraud / wilful misstatement / suppression) rather than section 73.
They alleged that non‑filing of returns and non‑payment despite receiving money amounted to suppression of facts with intent to evade tax.
Adjudicating authority:
Confirmed the tax demand.
Imposed 100% penalty under section 74.
Commissioner (Appeals) upheld the order.
2.4 Writ petition
The assessee filed W.P. No. 25826 of 2023 before the Andhra Pradesh High Court, mainly arguing:
There was no fraud, wilful misstatement or suppression; only financial hardship due to non‑payment by the client.
At worst, this was a case for section 73 (normal demand) with lower penalty, not section 74.
They tried to portray the default as unintentional.
3. the Andhra Pradesh High Court decided
The High Court did not accept the assessee’s excuses. Its reasoning is the core lesson.
3.1 Non‑filing of returns = suppression of facts in this factual matrix
The Court noted that:
The firm raised taxable invoices for about ₹20.92 crore including GST.
It received payments from the client (at least a substantial part).
It still failed to file any GSTR‑3B returns and did not remit GST for years.
It also did not voluntarily approach the department, disclose the issue or propose any composition of dues.
On these facts, the Court held that such prolonged non‑filing and non‑payment, despite raising invoices and receiving consideration, is not a mere technical lapse but qualifies as “suppression of facts” (if not fraud) for the purposes of section 74.
The Court’s logic was simple and blunt:
Filing of returns is the statutory mechanism by which the department learns what supplies have taken place and how much tax is due.
If a person keeps raising invoices and receiving money but hides the entire transaction chain from the return system, he is effectively concealing his tax liability.
That concealment is “suppression”, and when combined with collection of tax from customers without remitting it, it shows an intent to evade.
3.2 “Client did not pay me” is not a defence
The assessee argued that it could not pay GST because the sole client did not release funds in time. The Court firmly rejected this.
Key points:
GST liability does not depend on whether your client has paid you. The liability arises from supply, issuance of invoice and time of supply under the Act.
If you have collected tax in your invoices, you are holding that amount in trust for the Government. You cannot finance your business or cash flow by keeping that tax money.
Financial difficulty, even genuine, does not convert a deliberate non‑filing and non‑payment into an innocent mistake when it continues over a long period and involves large sums.
This reasoning is very important for works contractors, builders, Government contractors and others who often take the position “department has not paid us, so we could not pay GST”. After Sriba Nirman, that plea is extremely risky.
3.3 Section 74 invocation upheld, 100% penalty justified
The Court analysed sections 73 and 74 (also discussed at length in later commentary):
Section 73 – for cases without fraud, wilful misstatement, suppression; penalty roughly 10% of tax.
Section 74 – for cases where tax is not paid due to fraud, wilful misstatement or suppression to evade tax, penalty equal to 100% of tax.
The High Court held that, based on the facts, this case fell under section 74:
There was long‑term non‑filing,
non‑payment despite raising bills and getting money,
absence of voluntary disclosure, and
no convincing explanation beyond “client did not pay”.
Thus, invocation of section 74 and imposition of 100% penalty was upheld.
The writ petition was dismissed by the Andhra Pradesh High Court on 29‑01‑2025.
4. What the Supreme Court said
The assessee carried the matter to the Supreme Court in SLP (C) No. 14270 of 2025.
On 16‑05‑2025, the Supreme Court passed a short but very significant order:
It allowed the exemption application, but then clearly stated it saw “no good reason to interfere” with the High Court’s judgment, and dismissed the SLP.
Later, as reported in commentary, a review petition was also filed and dismissed, with the Court again saying there was no merit.
Tax Guru and other analyses summarise this as: “SC upholds GST penalty for wilful non‑filing of monthly returns” in Sriba Nirman Company.
Effectively, the Supreme Court has accepted:
that prolonged non‑filing and non‑payment can amount to wilful suppression, and that section 74 with 100% penalty is justified in such circumstances.
5. Why this case is important for all taxpayers and professionals
5.1 It narrows the “safe zone” between section 73 and section 74
Before this case, many practitioners treated section 74 as something to be invoked in clear fraud: fake invoices, benami firms, forged documents. Sriba Nirman shows that even real businesses, doing real works contract, can fall into section 74 purely because of persistent non‑filing and non‑payment.
The judgment reinforces a stricter view:
If you consistently do not file returns and do not pay tax, even while your books and invoices show that tax is due, the department is entitled to infer suppression and intent to evade.
Section 73 is not a default “comfort zone”; it is reserved for cases where the default is really without fraud or suppression.
5.2 “Cash flow problem” is not a legal shield
A lot of clients say: “We did not pay tax because customers did not pay us; there was no intention to evade.” After Sriba Nirman, that argument is extremely weak when:
invoices show tax, the taxpayer is using that money to run the business, and there is no effort to file returns or disclose liability.
Professionally, we must now be very careful before advising clients to “wait until payment comes, then file everything”. If they cross certain thresholds of non‑filing and non‑payment, they are walking into a section 74 zone.
5.3 Strong signal for the early GST years (2017‑2020)
This case covers July 2017 onwards, the early years when many taxpayers treated GST compliance loosely, thinking the department will be lenient initially.
Sriba Nirman shows the opposite:
The fact that these were early years did not soften the High Court’s view.
The length and size of default led to a very strict approach.
This is especially important now that field formations are auditing FY 2017‑18 to 2020‑21 more aggressively.
6. Practical lessons and advice for taxpayers and professionals
6.1 Do not keep GSTR‑3B pending for long periods
The biggest takeaway is simple: do not leave GSTR‑3B unfiled for long periods when you know tax is due. Even if you have a dispute on rate or classification, file returns and pay what you reasonably believe is due, then litigate the difference.
Non‑filing of GSTR‑3B + non‑payment + raising invoices is precisely the triangle that got Sriba Nirman into section 74.
6.2 If there is a genuine crisis, put it on record early
If there is genuine financial distress (for example, large government client has not paid), do not go silent:
Write to the department explaining the situation,
File at least nil or partially paid returns with an explanation,
Explore instalments or other options.
If you keep completely silent and neither file nor pay, later pleas of hardship may not be believed, as this case shows.
6.3 Be very cautious with “voluntary payment” under section 74(5)
Sriba Nirman itself is about penalty, but read together with Karnataka and other High Court cases on DRC‑03 coercive payments, we see a tougher penalty environment:
Section 74(5) gives a chance to pay tax + interest + 15% penalty before SCN and escape higher penalty.
But if a client is inconsistent in filing and paying, and then suddenly pays under pressure, it may not automatically save him. The department may still go ahead under section 74 if they see a pattern like in Sriba Nirman.
6.4 For professionals: early warning to clients
Professionals should develop a “red‑flag dashboard” in their own mind:
How many months has the client not filed 3B?
Is client raising invoices with GST but not paying?
Is the client’s GSTR‑1 full but GSTR‑3B nil?
Is the unpaid tax amount large compared to business size?
If the answers are worrying, you should formally warn the client (email/letter) that continuing like this may attract section 74 with 100% penalty, and refer to Sriba Nirman as an example. That protects your professional position and may push the client to correct course.
7. How this case interacts with buyer‑friendly ITC judgments
There is an interesting contrast:
In cases like Instakart (Karnataka HC), courts protect bona fide buyers from supplier defaults and NGTP issues. ITC is safeguarded where the buyer has done everything right.
In Sriba Nirman, the focus is on the taxpayer himself who is not filing returns and not paying, even after collecting tax.
The message is balanced:
Courts are ready to protect honest recipients who are pulled into supplier frauds.
Courts are also ready to hit hard where the taxpayer himself has abused the system by not filing and not paying.
For your practice, you can use Instakart and similar rulings for recipients, and Sriba Nirman as a caution for your own clients about their compliance.
8. Conclusion – A case to quote in every non‑filing / non‑payment discussion
The Sriba Nirman Company line is now a key precedent:
AP High Court (29‑01‑2025) held that sustained non‑filing of returns and non‑payment of GST, despite raising invoices and receiving payments, is wilful suppression justifying section 74 and 100% penalty.
Supreme Court (16‑05‑2025) in SLP(C) 14270/2025 refused to interfere and later dismissed review, effectively affirming that view.
For taxpayers and professionals, this is not just another case citation. It is a clear red line: once you start issuing invoices with GST, you are playing with fire if you do not file returns and do not pay the tax. “Client did not pay”, “cash crunch”, “first years of GST” – all these are weak shields if the pattern looks like suppressed liability.
In my opinion, every GST advisory, every compliance seminar, and every internal firm training should include Sriba Nirman Company as a core example: this is what happens when you treat GSTR‑3B as optional and GST collections as your own cash flow. It is a hard lesson, but it is better that taxpayers hear it now from professionals, rather than later from a penalty order under section 74.
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