The Madras High Court dealt with a case involving Tvl. Power Lead Electricals and the Deputy State Tax Officer-2, Vaniyambadi Circle, concerning a tax dispute under the GST Acts for the fiscal year 2017-18. The petitioner challenged an order issued under Section 74, arguing it was barred by limitation due to an earlier intimation under Section 73 regarding a mismatch in tax credits. The department had initially issued a notice under Section 73 for excess Input Tax Credit (ITC) claims, but later issued a show cause notice under Section 74 alleging suppression.
The core issue was whether the department could invoke Section 74 following a Section 73 intimation and if the proceedings for FY 2017-18 were time-barred. The Court ruled that the proceedings were not barred by limitation, citing the exclusion of the COVID-19 period based on Supreme Court orders, TOLA provisions, and notifications under Section 168A of the GST Acts. The Court affirmed that an initial Section 73 intimation did not prevent subsequent Section 74 proceedings if suppression was indicated.
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The Court referenced its judgment in related cases, noting that the threshold for extended limitation under Section 74 is lower under GST laws than previous tax laws. It found no fault in the assessment order and dismissed the petition but allowed the petitioner to appeal within 30 days, directing the appellate authority to consider the appeal on its merits, subject to compliance with Section 107 of the GST Acts.
Order Date - 08 June 2026
Parties: Tvl. Power Lead Electricals Vs The Deputy State Tax Officer-2, Vaniyambadi Circle
Facts -
- Tvl. Power Lead Electricals challenged the order dated 03.02.2025 passed under Section 74 of the GST Acts for FY 2017-18, contending that the proceedings were barred by limitation.
- The dispute arose due to a mismatch between GSTR-2A and GSTR-3B, where the department alleged that the petitioner had claimed excess Input Tax Credit (ITC). An intimation in Form GST DRC-01A was initially issued under Section 73, to which the petitioner replied that the proceedings were time-barred.
- After rejecting the petitioner's explanation, the department issued a Show Cause Notice in Form GST DRC-01 under Section 74, alleging suppression and eventually confirmed a tax demand of ₹11,84,332 along with interest and penalty.
- Aggrieved by the invocation of Section 74 despite the earlier Section 73 proceedings, the petitioner approached the Madras High Court seeking quashing of the assessment order.
Issue -
- Whether the department could invoke Section 74 after issuing an earlier Section 73 intimation and whether the proceedings were barred by limitation for FY 2017-18?
Order -
- The Court held that the proceedings were not barred by limitation. The limitation period had to be computed after excluding the COVID-19 period, taking into account the Supreme Court's limitation extension orders, TOLA provisions, and notifications issued under Section 168A of the GST Acts.
- The Court observed that merely because an intimation was initially issued under Section 73, the department was not precluded from subsequently invoking Section 74 where facts disclosed possible suppression. The scrutiny conducted under Section 61 and subsequent proceedings justified the invocation of Section 74.
- Referring to its common judgment in the connected batch of cases, the Court reiterated that the threshold for invoking the extended limitation under Section 74 is comparatively lower under the GST regime than under the earlier indirect tax laws, and the present case fell within that framework.
- Finding no infirmity in the assessment order, the Court dismissed the writ petition. However, it granted the petitioner liberty to file a statutory appeal within 30 days, directing the appellate authority to decide the matter on merits subject to compliance with Section 107 of the GST Acts.
