ITC Reversal under Rule 42 upheld; invocation of Section 74 set aside in absence of fraud or wilful suppression {Power Tech Global Pvt. Ltd. v. Commissioner of CGST & Central Excise}
Facts:
The taxpayer had availed ITC in respect of supplies involving MEIS Duty Credit Scrips. The Department alleged that ITC was required to be reversed under Rule 42 of the CGST Rules and invoked Section 74 of the CGST Act, alleging suppression of facts with an intent to evade tax.
Issue:
Whether the reversal of ITC under Rule 42 was sustainable and whether the extended period and penal provisions under Section 74 could be invoked on the ground of fraud, wilful misstatement or suppression of facts.
Held:
The GSTAT upheld the ITC reversal under Rule 42 but set aside the invocation of Section 74. Since the facts relating to the supply of MEIS Duty Credit Scrips were known to both the taxpayer and the Department, mere non-declaration could not amount to wilful suppression. Section 74 requires fraud, wilful misstatement or deliberate suppression with an intent to evade tax, which the Department failed to establish.
