SC Allows Review on 100% GST Penalty Without Proof of Fraud

By Jyoti Baluni Goods and Services Tax Featured , Judiciary August 9, 2025

TaxGuru Citation: 2025 taxguru.in 6727
Case Name: Godway Funicrafts Vs State of Andhra Pradesh & Ors. (Supreme Court of India)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: Supreme Court of India

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Godway Funicrafts Vs State of Andhra Pradesh & Ors. (Supreme Court of India)

Contentions raised in pleadings but not argued in the main hearing can be validly raised in review; Supreme Court Remands Review Petition on 100% Penalty Under Section 74 CGST Act for Reconsideration by High Court

Background: The case involves an appellant, M/s Godway Funicrafts, who challenged the dismissal of their writ petition and a subsequent review application by the High Court of Andhra Pradesh. The core issue revolved around the imposition of a 100% penalty without, as the appellant argued, the department establishing fraud or willful suppression under Section 74 of the CGST Act.

Arguments of the Parties

Appellant (M/s Godway Funicrafts): The appellant contended that the plea regarding the penalty was included in the writ petition’s memorandum but was not argued in detail during the initial hearing. They filed a review application, based on Order XLVII Rule 1 of the Code of Civil Procedure, 1908, to have this point reconsidered. They argued that the High Court erred by rejecting the review application on the technicality that the point was not argued during the writ hearing.

Court’s Decision

The Supreme Court partly allowed the appeals. The court noted that the issue of the 100% penalty was indeed raised in the memorandum of the writ petition. The court held that the High Court should not have rejected the review application on the technical ground that the plea was not argued during the original writ hearing.