{"id":4081,"date":"2025-05-29T15:14:53","date_gmt":"2025-05-29T09:44:53","guid":{"rendered":"https:\/\/www.centaxonline.com\/blog\/?p=4081"},"modified":"2025-05-29T15:14:53","modified_gmt":"2025-05-29T09:44:53","slug":"hc-stays-penalty-section-74-cgst-demand-vs-section-73","status":"publish","type":"post","link":"https:\/\/www.centaxonline.com\/blog\/hc-stays-penalty-section-74-cgst-demand-vs-section-73","title":{"rendered":"HC Stays Penalty \u2013 Section 74 CGST Demand vs Section 73"},"content":{"rendered":"<pre><strong>Case Details: <a href=\"https:\/\/www.centaxonline.com\/latest-news-updates\/gst\/101010000000398675\/order-to-be-stayed-since-assessee-paid-itc-with-interest-pre-audit-and-benefit-of-notification-no-212024-ct-not-considered-hc\">Aditya Craft &amp; Papers Pvt. Ltd. Versus Principal Commissioner, CGST &amp; Central Tax (2025) 30 Centax 119 (Ori.)<\/a><\/strong><\/pre>\n<h2><em>Judiciary and Counsel Details<\/em><\/h2>\n<ul>\n<li><strong>Harish Tandon<\/strong>, CJ. &amp; <strong>Murahari Sri Raman<\/strong>, J.<\/li>\n<li><strong>S\/Shri Bibekanand Mohanti<\/strong>, Sr. Adv. &amp; <strong>Ashish Kumar Samal<\/strong>, Adv. for the Petitioner.<\/li>\n<li><strong>Shri Ch. S. Misra<\/strong>, Senior Standing Counsel for the Respondent.<\/li>\n<\/ul>\n<h2><em>Facts of the Case<\/em><\/h2>\n<p>The assessee challenged a demand raised under Section 74 of the CGST Act for FY 2017\u201318, alleging wrongful availment of input tax credit (ITC). The assessee submitted that it had voluntarily reversed the disputed ITC and paid the corresponding amount prior to initiation of audit. However, the adjudicating authority proceeded to assess the case under Section 74 without considering that the pre-audit deposit did not meet the ingredients of Section 74(1).<\/p>\n<p>The assessee contended that if proceedings had been initiated under Section 73 instead, it would have qualified for waiver of interest and penalty under Notification No. 21\/2024\u2013CT dated 08-10-2024, as further clarified by Circular No. 238\/32\/2024-GST dated 15-10-2024. It was urged that the incorrect invocation of Section 74 deprived the assessee of this statutory benefit.<\/p>\n<h2><em>High Court Held<\/em><\/h2>\n<p>The High Court noted that the jurisdictional basis of invoking Section 74 had been disputed by the assessee, especially since the payment and ITC reversal occurred before the audit commenced. The Court held that this contention merited judicial consideration. As an interim measure, the Court directed the assessee to deposit only the interest amount and stayed the penalty portion of the demand raised under the impugned order until the next date of hearing.<\/p>\n<p>The Court implicitly acknowledged the relevance of Notification No. 21\/2024\u2013CT and Circular No. 238\/32\/2024-GST in determining whether the proceedings should fall under Section 73 or Section 74, and whether the assessee is entitled to waiver of interest and penalty under the amnesty framework.<\/p>\n<h2><em>List of Circulars and Notifications Cited<\/em><\/h2>\n<ul>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=Circular%20No.%20238%2F32%2F2024-GST&amp;itemType=AP\">Circular No. 238\/32\/2024-GST<\/a> dated 15-10-2024<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=Notification%20No.21%2F2024-CT&amp;itemType=AP\">Notification No.21\/2024-CT<\/a>, dated 8-10-2024<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Case Details: Aditya Craft &amp; Papers Pvt. Ltd. Versus Principal Commissioner, CGST&hellip;<\/p>\n","protected":false},"author":8,"featured_media":4105,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37,60,189],"tags":[],"class_list":["post-4081","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-gst","category-news","category-gst-case-chronicles"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>HC Stays Penalty \u2013 Section 74 CGST Demand vs Section 73<\/title>\n<meta name=\"description\" content=\"High Court stays penalty on CGST demand, noting ITC reversed pre-audit; assessee may claim interest &amp; penalty waiver under Notification 21\/2024-CT scheme.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.centaxonline.com\/blog\/hc-stays-penalty-section-74-cgst-demand-vs-section-73\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"HC Stays Penalty \u2013 Section 74 CGST Demand vs Section 73\" \/>\n<meta property=\"og:description\" content=\"High Court stays penalty on CGST demand, noting ITC reversed pre-audit; 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