Non-Declaration in Returns Alone Does Not Prove Suppression for Section 74: GSTAT Bengaluru and Cuttack

Two GST Tribunal benches refused Section 74 penalties where tax had been paid before the notice, one on audit-detected reverse charge items and the other on seven months of late returns.

GST Tribunal benches at Bengaluru and Cuttack have held that Section 74 of the CGST Act cannot be invoked merely because a transaction was not declared in returns or returns were filed late, where the taxpayer paid the tax before the notice and no intent to evade is shown. [Needs Manpower Support Services Pvt Ltd v. Commissioner, Commissioner of Central Taxes Vanijya Therige Bengaluru & Ors., 2026-juristway.com-3179-GSTAT(Bengaluru)-GST; Sanjeeb Kumar Dehuri v. Mukesh Kumar Kakani, 2026-juristway.com-3185-GSTAT(Cuttack)-GST]

Needs Manpower Support Services. Sudha Koka, Member (Technical), and Srikanth Venkatraman, Member (Judicial), cancelled penalties under Section 74 on four audit objections for July 2017 to March 2020: reverse charge on legal fees and sponsorship, on supplies from unregistered persons and on rent-a-cab, and non-reversal of ITC on amounts written off. The appellant had paid the tax and interest before the notice dated 10 Feb 2023, and Section 74 was invoked only because the values were not in GSTR‑3B.

The Bench held that mere omission in a return, or payment after audit verification, cannot, without examining the circumstances, establish the ingredients of Section 74(1). The authorities had not considered the explanations, including that the services were provided to clients and that daily purchases up to ₹5,000 were exempt under Notification No. 8/2017-Central Tax (Rate). It relied on Tata Steel Limited v. Union of India ((2026) 45 Centax 361) and Instruction No. 05/2023-GST.

Bharat Super Market. Suchismita Misra, Member (Judicial), and Ananda Satpathy, Member (Technical), upheld the first appellate finding that Section 74 could not be invoked against a retailer that filed seven months’ pending returns in April and June 2018 after an anti-evasion visit, discharging tax of ₹73,58,992, mostly from its credit ledger. The Section 74 proceeding began only on 27 Dec 2022.

The Bench noted that the cash component had been deposited on 31 Mar 2018, before the visit, and interest paid before the proceeding. Suppression under Explanation 2, it held, concerns information not declared in returns or documents actually furnished, and the taxpayer’s conduct pointed to compliance. The first appellate authority’s reduction of penalty to 10% was, however, set aside, and the proper officer must determine liability, if any, under Section 73 read with Section 75(2), within the statutory time limit.

2026-juristway.com-3179-GSTAT(Bengaluru)-GST | 2026-juristway.com-3185-GSTAT(Cuttack)-GST