Order dated 10 July 2025 
Parties :  MC Bauchemie India Pvt. Ltd. V. Union of India & Ors.

Facts -

• The petitioner, a registered dealer, challenged the show cause notice dated 27.12.2023 and consequential orders passed under Section 73 of the CGST Act for FY 2018–19. The department alleged tax shortfall based on a mismatch between turnover in the E-Way Bills and the GSTR-9 return, along with issues in ITC claims. 
• The petitioner contended that such mismatch was merely clerical and did not involve fraud, suppression, or willful misstatement. Despite filing objections, the authorities proceeded with final orders without adequately considering their explanation.

Issue -

• Whether proceedings under Section 73 of the CGST Act can be validly initiated based solely on data mismatch between E-Way Bill and GSTR-9?

Order -

• The divisional bench of the Hon’ble high court held that for the issuance of show cause notice under Section 74 of the GST Act, the respondent authority has to alteast come to a prima facie conclusion that there is fraud, willful misstatement or suppression by the assessee.
• For that the respondent authority is required to carry out preliminary investigation to find out such fraud, willful misstatement or suppression on the part of the assesse to initiate the proceeding under Section 74 of the GST Act which would entail rigors of higher amount of interest, penalty and also give an extended period for assumption of jurisdiction by the respondent authority.
• Therefore, the Court was of the opinion that the respondent authority could not have assumed the jurisdiction under Section 73 of the GST Act in absence of any fraud, willful misstatement or suppression for issuance of notice on the ground of difference between the turnover as per E-way Bill and turnover declared by the assessee in Form GSTR-09.