Demand for GSTR-1 and GSTR-3B mismatch to be examined under sec. 73 post sec. 128A insertion sec. 74 order quashed { Zyvana Integrated Services (P.) Ltd. vs. Additional Commissioner of GST and Central Excise [2026] 187 taxmann.com 1062 (Madras)}
Facts:
- Assessee disclosed outward supplies in GSTR-1 for the period from March 2018 to March 2021 but did not fully discharge the corresponding GST liability in GSTR-3B within the prescribed time.
- Department issued a Section 74 show cause notice for the GSTR-1/GSTR-3B mismatch (March 2018–March 2019) and a separate Section 73 notice for later periods.
- The adjudicating authority confirmed the demand under Section 74 and imposed a 100% penalty.
- Assessee contended that the delay occurred because customers had not made payments and there was no intention to evade tax.
Issue:
- Whether the GSTR-1 and GSTR-3B mismatch involving delayed payment of output tax should be dealt with under Section 74 (fraud/suppression) or reconsidered under Section 73 in view of the insertion of Section 128A.
Held:
- The High Court held that once outward supplies are declared in GSTR-1, the corresponding tax must be paid through GSTR-3B by the due date, irrespective of whether payment has been received from customers.
- However, in light of the insertion of Section 128A and the GST Council’s deliberations, cases involving GSTR-1/GSTR-3B mismatch and short payment of tax should be examined under Section 73 rather than Section 74.
- Accordingly, the Section 74 order was quashed and the matter was remanded to the adjudicating authority for fresh adjudication under Section 73.
