Case Law Details
Singh Electrical Store Vs Superintendent Cgst And Central Excise (Allahabad High Court)
The Allahabad High Court addressed a writ petition filed by Singh Electrical Store against an order issued by the Superintendent of CGST and Central Excise under Section 74 of the Central Goods and Services Tax Act, 2017. The court, upon reviewing the order dated February 21, 2025, noted a significant lack of application of mind by the respondent authority. The order stated that while Singh Electrical Store argued that an excess claim was due to a clerical error and should be considered under Section 73 (not involving fraud), the authority deemed it inappropriate to address this aspect at their level, citing the appellate authority’s jurisdiction under Section 75.
The High Court strongly disagreed with this reasoning, emphasizing that Section 74 explicitly requires the presence of fraud, willful misstatement, or suppression of material facts. This element is a mandatory prerequisite for invoking this particular section. The court expressed surprise at the lack of reasoning in the order regarding the crucial aspect of fraud. Consequently, finding a clear non-application of mind, the Allahabad High Court intervened and quashed the impugned order. The court directed the Commissioner of Central Goods and Services Tax, Varanasi, to investigate the issue of officers passing orders under Section 74 without providing adequate reasons for alleging fraud or misstatement. Furthermore, the court instructed the concerned authority to grant Singh Electrical Store a hearing and subsequently pass a reasoned order within twelve weeks. The writ petition was accordingly allowed.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Prakhar Saran Srivastava, learned counsel appearing on behalf of the petitioner and Sri Parv Agarwal, learned counsel appearing on behalf of the respondent.
2. This is a writ petition under Article 226 of the Constitution of India wherein the writ petitioner is aggrieved by the order dated February 21, 2025 (Ref. No.ZD0902252997022) passed by the respondent under Section 74 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘Act’).
3. Upon a perusal of the impugned order, we are of the view that the respondent authority has not applied his mind and has come to the following finding :-
“5.2 However, they argued that the said excess claim was on account of clerical error and not intentional. They contended at length as to why their case not covered under section 74 but under section 73 of the CGST Act, 2017. Since the jurisdiction to consider such claim lies with the appellate authority and above in terms of section 75, I do not find it appropriate to deal on this aspect at the level of adjudication.”
4. It is trite law that to be covered under Section 74 of the Act, there is a mandatory requirement of there being fraud or any willful-misstatement and/or suppression of material This being an essential ingredient of the particular section, the authority concerned could not have made the statement in the impugned order that it was not appropriate for him to deal on this aspect at his level of adjudication.
5. We are indeed surprised at the reasoning or rather for non reasoning of the authority concerned. In fact, there appears to be complete non application of mind which leads us to intervene in this matter at this stage. Accordingly, we direct the Commissioner, Central Goods and Services Tax, Varanasi to look into this particular issue wherein officers are passing orders under Section 74 of the Act without providing the reasons for invoking Section 74 of the Act for fraud or any willful-misstatement or suppression of material facts. Commissioner, Central Goods and Services Tax, Varansi is directed to take appropriate action at his end.
6. In light of the observation made above, the impugned order dated February 21, 2025 is quashed and set aside with a direction upon the authority concerned to grant an opportunity of hearing to the petitioner, and thereafter, pass a reasoned order within a period of twelve weeks from date.
7. With the above directions, the writ petition is allowed.
8. A copy of this order be communicated by Registrar (Compliance) of this Court to Commissioner, Central Goods and Services Tax, Varansi.
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