Mere non-filing of returns or non-payment of tax doesn’t automatically justify invoking Section 74.
Andhra Pradesh High Court judgment in the case of M/s Sriba Nirman Company vs. Commissioner (Appeals), Guntur & Others [W.P. No. 25826 of 2023, dated 29.01.2025] has held that non-filing of GSTR-3B and non-payment of GST, if wilful, constitutes “suppression of facts” and attracts penalty under Section 74 of the CGST Act.
The Judgment is further upheld by Supreme court No.- Special Leave to Appeal ( C ) No. 14270 / 2025 Dated.- May 16, 2025
Let us have a Short Overview of the case:
Issue:
Whether penalty under Section 74 of the CGST Act can be imposed for non-filing of GSTR-3B and non-payment of GST, especially when tax was later paid voluntarily by the assessee.
Facts:
• The petitioner, a works contractor, failed to file GSTR-3B returns and pay GST for FY 2017–18.
• GST liability: ₹3.19 crore (arising out of 9 invoices raised in March 2018).
• Due to non-payment by its client, the petitioner did not pay GST or file returns on time.
• Post inspection by DGGI on 31.07.2018, petitioner deposited the tax in four instalments by 29.09.2018 and filed all pending GSTR-3B returns.
• However, interest under Section 50 and penalty under Section 74 were demanded through a SCN issued in 2020.
Penalty was confirmed by both the adjudicating and appellate authorities.
Petitioner’s Arguments:
1. Tax was paid voluntarily before the SCN; hence, Section 74 should not be invoked.
2. There was no fraud, wilful misstatement, or suppression to evade tax.
3. The timeline under Section 44 for annual return filing (07.02.2020) should be considered for determining default.
Court’s Findings:
• Mere non-filing of returns or non-payment of tax doesn’t automatically justify invoking Section 74. There must be a wilful suppression of facts with intent to evade tax.
• Explanation 2 to Section 74 defines “suppression” as non-declaration of facts required in returns. This must be wilful to attract Section 74.
• In this case, despite financial hardship claims, petitioner had received some payments and still failed to file returns or pay GST — indicating wilful conduct.
• Interest was paid only after SCN, and 15% penalty under Section 74(5) (which could have barred SCN) was not paid, hence Section 74 was correctly invoked.
Conclusion:
• Non-filing of GSTR-3B and non-payment of GST, if wilful, constitutes “suppression of facts” and attracts penalty under Section 74.
• The petitioner’s conduct indicated wilful suppression.
• Writ Petition dismissed.
The copy of the order is as under:
