Orissa HC to Hear GST Section 74 Dispute Despite Voluntary ITC Reversal before audit

Aditya Craft & Papers Private Limited Vs Principal Commissioner, CGST & Central Tax (Orissa High Court)

Orissa High Court to Address GST Section 74 Jurisdiction in Voluntary Payment Case

Cuttack: The Orissa High Court is poised to hear a case raising a jurisdictional question under the Goods and Services Tax (GST) law: whether tax authorities can initiate proceedings under Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act), which deals with cases involving fraud, willful misstatement, or suppression of facts, when a taxpayer has voluntarily reversed and paid the Input Tax Credit (ITC) amount before the commencement of an audit. The petitioner contends that such circumstances warrant proceedings under Section 73, which could potentially offer benefits like waiver of interest or penalty under a recent scheme.

The case involves Aditya Craft & Papers Private Limited, which has approached the High Court challenging an assessment order. The core of the dispute relates to ITC availed by the petitioner during the initial year of GST implementation, 2017-18. According to the petitioner’s submission before the court, they had availed an amount of ITC totaling Rs. 1,49,729/-. The petitioner subsequently identified this amount and, notably, voluntarily reversed the availed ITC and paid the corresponding sum to the tax department. A key element highlighted by the petitioner is the timing of this action: the reversal and payment were completed before the initiation of any audit process or formal investigation by the GST authorities. This voluntary compliance, the petitioner argues, is critical to determining the applicable legal framework for assessing the matter.