Tvl. Power Lead Electricals Vs Deputy State Tax Officer (Madras High Court)
The Madras High Court dismissed the writ petition challenging an order passed under Section 74 of the GST enactments for the tax period 2017-18 and held that the proceedings were not barred by limitation. The Court also held that the invocation of Section 74 was justified in the facts of the case and granted the petitioner liberty to pursue the statutory appellate remedy on merits.
The dispute arose from a mismatch between the Input Tax Credit (ITC) reflected in GSTR-2A and the ITC claimed by the petitioner in GSTR-3B for the tax period 2017-18. The Department initially issued an intimation in Form GST DRC-01A dated 20.09.2023. The petitioner replied that the proposed action was barred by limitation under Section 73 of the GST enactments. As the reply was not accepted, the Department issued a show cause notice in Form GST DRC-01 dated 06.12.2023 by invoking Section 74. After considering the petitioner’s reply, an order dated 03.02.2025 was passed confirming tax of ₹11,84,332 along with interest and penalty.
Before the High Court, the petitioner argued that the Department had initially invoked Section 73 and, after the petitioner raised the issue of limitation, improperly resorted to Section 74 to overcome the limitation period. It was contended that there was no material to justify proceedings under Section 74 and that the respondent could not change the statutory basis of the proceedings after receiving the petitioner’s objection. The Department, on the other hand, contended that the proceedings were within limitation after taking into account the extensions granted during the COVID-19 period, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, Section 168A of the GST enactments, and the orders of the Supreme Court extending limitation. It further submitted that the mismatch between GSTR-2A and GSTR-3B and the petitioner’s failure to furnish a satisfactory reply justified invoking Section 74.
