GST Update

 Desk of CA. Praveen Sharma – 1049 Series (CAPS) 

 Supreme Court IN THE CASE OF M/s Safecon Lifesciences Private Limited

Additional Commissioner, Grade-2 & Anr. v. M/s Safecon Lifesciences Private Limited

 Supreme Court: Section 74 Cannot Be Invoked Without Proof of Fraud

In a significant relief for taxpayers, the Supreme Court upheld the Allahabad High Court's decision in the case of Additional Commissioner, Grade-2 & Anr. v. M/s Safecon Lifesciences Private Limited. The Court dismissed the Revenue's appeal and reaffirmed that Section 74 of the CGST Act cannot be invoked merely on suspicion or allegation.

The Court observed that before initiating proceedings under Section 74, the GST Department must establish fraud, wilful misstatement, suppression of facts, or fake Input Tax Credit (ITC) with credible evidence. In this case, the taxpayer successfully proved that the transactions were genuine, goods had actually moved, and GST had been duly paid by the supplier.

Since the Department failed to produce any evidence of fake invoices, fraud, or suppression of facts, the invocation of Section 74 was held to be unsustainable.

This judgment reinforces that penal provisions under GST must be applied only in genuine cases involving tax evasion. Genuine taxpayers cannot be subjected to penalty proceedings merely because of suspicion or unsupported allegations.

This ruling is expected to provide significant protection to bona fide taxpayers and strengthen the principle that evidence, not assumptions, must form the basis of proceedings under Section 74.

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Regards
CAPS