The Madras High Court has set aside an assessment order imposing 100% penalty under Section 74 for mismatch between ITC claimed in GSTR-3B and the auto-populated GSTR-2A, holding that the ingredients of Section 74 (fraud, wilful misstatement or suppression of facts to evade tax) were not satisfied. The ruling by Justice Senthilkumar Ramamoorthy in WP No. 36165/2026 (Aravintha Marbles, decided 18.09.2026) applies the Supreme Court’s recent judgments in Tata Steel Ltd. v. Union of India (2026 INSC 920) and G.R. Infra Projects Ltd. v. State of MP, and CBIC Instruction No. 5/2023-GST, remanding the matter for reconsideration under Section 73 with the petitioner depositing 50% of the tax demand.
The court found that on perusal of the SCN and the impugned order, the ingredients of Section 74 were not established. The Revenue’s attempt to distinguish Tata Steel on the ground that proceedings there were converted from Section 73 to Section 74 was rejected. The ruling reinforces the growing judicial consensus that ITC mismatches arising from GSTR-2A/3B reconciliation, without additional evidence of fraud or suppression, cannot sustain Section 74 proceedings.
- 2026-juristway.com-2685-HC(Madras)-GST | High Court of Madras | WP No. 36165 of 2026 | 18.09.2026