The GST Appellate Tribunal at Prayagraj upheld a Section 74 demand on a Prayagraj iron trader based on notebooks seized from its premises, but capped tax at the level fixed before the remand.

Private notebooks seized from a dealer’s own premises, recording dated sales not shown in its returns, can found a demand under Section 74 of the CGST Act, 2017, but an appellant who wins a remand cannot be left worse off than before, the GST Appellate Tribunal (GSTAT), Prayagraj has held [Raj Trading Co. v. JP Singh, 2026-juristway.com-3441-GSTAT(Prayagraj)-GST].

The Bench of Mahtab Ahmad, Member (Judicial), and Ashish Varma, Member (Technical), who wrote the judgment, dismissed the trader’s appeal on merits.

On 23 Mar 2018 the Special Investigation Branch surveyed the iron and steel trader’s godown-cum-office. The proprietor stated that no stock register was kept and sales were made on duplicate pads whose counterparts were destroyed. Three bound notebooks seized there recorded sales of ₹2,52,01,836 for September 2017 to March 2018. An ex parte order of 31 Dec 2021 confirmed tax of ₹1,26,00,000 on estimated sales of ₹7 crore. On first appeal, tax was cut to ₹45,00,000 on 10 Sep 2024. The Allahabad High Court quashed that order on 2 Sep 2025 for want of reasons and remanded it. The fresh appellate order of 18 Dec 2025 confirmed tax of ₹45,36,330.

The trader argued that the notebooks were unauthenticated “dumb documents”, partly belonging to others. The Tribunal held that Rule 56(10) of the CGST Rules, 2017 raises a rebuttable presumption that records found are maintained by the registered person. On a preponderance of probability, given where they were found, their contents and the proprietor’s unretracted admissions, they were the trader’s own account of clandestine sales. It accepted that loose or third-party records cannot alone sustain a demand, but found those cases distinguishable.

On quantum, the Tribunal applied the principle of no reformatio in peius, that a person should not be worse off for having appealed, from Saudi Arabian Airlines v. Union of India (2026 INSC 933). Since the trader had won the remand from the High Court, the confirmed tax and penalty, each ₹36,330 higher than in the 2024 order, were capped.

The demand was limited to tax of ₹45,00,000, an equal penalty, and interest on that tax not exceeding ₹56,70,000 up to 10 Sep 2024, with interest continuing thereafter until payment. Amounts already deposited or recovered are to be adjusted.

2026-juristway.com-3441-GSTAT(Prayagraj)-GST