BENGAL SPARE PARTS SUPPLY vs M Rahaman, Sanjay Bangartale
- Court
- GST Appellate Tribunal
IN THE GOODS AND SERVICES TAX APPELLATE TRIBUNAL
KOLKATA BENCH
COURT NO. 1
Appeal Case No. APL/48/KLK/2026
BENGAL SPARE PARTS SUPPLY
Through its authorized representative
Shri Biswanath ..…………..Appellant
VERSUS
M Rahaman, Commissioner of CGST & CX
Howrah Commissionerate,
Commissioner of CGST & CEX
Howrah Commissionerate1
5/1 strand Road M. S Building
Kolkata - 700001
& Ors. …………..Respondent/s
In appearance :
:
For the appellant Mr. Biswanath Ghosh, Ld. Advocate
For the respondent : Ms. Anindita Ghoshal, Assistant Commissioner,
CGST
CORAM :
Hon’ble Shri S.G. Chattopadhyay : Judicial Member
Hon’ble Shri Malay Ghosh : Technical Member
Final Order
Date of Hearing : 09/10/2026
Date of Order : 06/11/2026
Per Malay Ghosh (Technical Member) :
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[1] The Appellant has preferred this appeal before the GSTAT, Kolkata Branch against
the impugned Order-in-Appeal No. 198/HWH/GST/JC/25-26 dated 04.11.2025 with
reference no. ZD191125010496I dt. 07.11.2025 passed by the Joint Commissioner,
CGST & CX, Kolkata Appeals-II Commissionerate arising out of Order-in-Original
73/GST/Audit/Supdt/RangeV/Singur/24-25 dt. 19.08.24 passed by Superintendent of
CGST & CX, Range-V, Singur Division, Howrah Commissionerate.
[2] The Appellant supplies goods of "Hardened Protein" and goods of "Cellulosic
Materials". The instant proceedings have been originated during the course of audit of
statutory records and documents maintained by M/s BENGAL SPARE PARTS SUPPLY
holding GSTIN: 19AHDPD7625C1ZN by a team of officers of GST Audit, Audit - II
Commissionerate, Kolkata by way of issuance of Show Cause Notice No. 202/23-24 dt.
14.12.2023 for the F.Y. 2017-18, 2018-19 and 2019-20 under Section 74 (1) of CGST Act,
2017 raising objections like short-payment of tax on supplies detected in Profit and Loss
Account but not declared in GSTR-3B or GSTR-9, eligibility of Tran-I credit availed by
them, non-reversal of ITC on discount received from suppliers, non-reversal of ITC on
debit note issued by the appellant to certain supplier etc.
[3] It appears from the documents available that the short payments under CGST and
SGST taken together is as below:
For 2017-18: Rs. 15,84,092/-
For 2018-19: Rs. 2,47,874/-
For 2019-20: Rs. 2,57,550/-
[4] The entire demand was confirmed along with applicable interest and a penalty
equivalent to tax confirmed vide Order-in-Original dt. 19.08.2024 issued by
Superintendent, Range-V, Singur Division, CGST & CX, Howrah Commissionerate except
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for the issue on non-reversal of GST on discount received amounting to Rs. 1,42,530/- .
The applicant had paid Rs. 19,14,473/-before issuance of Show Cause Notice, the only
unpaid tax amount got reduced to Rs. 32,512/- (SGST).
[5] Aggrieved by the Order-in-Original, the appellant filed an appeal with the
appellate authority (Joint Commissioner) after admitting the amount of Rs. 32,512/-
(SGST) and only disputing that there is no ground to invoke the provisions of Sec. 74
and hence they prayed that:
a) the impugned adjudication be modified immediately by setting aside the
invocation of Sec. 74 and decide the case under Sec. 73; or
b) remanding the order to the adjudicating authority with the direction to decide
the case afresh under Sec. 73 of the Act ibid in view of the provision of Sec. 75(2)
of the Act as the invocation of Sec. 74 is not established, so as to allow the
appellant to avail the benefit of waiver of interest and penalty as provided under
new Sec. 128A of the CGST Act, 2017 within the given time frame as the entire
tax liability as demanded and confirmed has already been paid.
[6] The Appellate Authority vide the impugned Order-in-Appeal dropped the demand
of interest and penalty for F.Y. 2017-18 observing that the Adjudicating Authority failed
to establish the presence of ingredient requisite for invocation of Section 74 of CGST Act,
2017. Notwithstanding the above fact, the Appellate Authority explicitly held in Para 18
of the said Order-in-Appeal that the appellant uploaded the Profit and Loss
Account/Trading Account only for the F.Y. 2017-18 and prior to Audit, those records for
F.Y. 2018-19 and 2019-20 was not available with the department. It was also observed in
the same Para that the discrepancies were not disclosed voluntarily by the Appellant but
were detected by the department during the course of Audit.
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[7] Grounds of Appeal:
The appellant has now challenged the impugned order-in-appeal upholding
interest and penalty for F.Y. 208-19 and 2019-20 under Section 74 of CGST Act for being
erroneous merely on the ground that part of the demand for F.Y. 2017-18 was decided
under Section 73 of the said Act allowing relief to the appellant.
From the Grounds of Appeal, it appears that the only purpose of the appellant for the
instant appeal is causing the case to be determined under Section 73 of the said Act to
avoid the interest and penalty by way of availing benefit under Section 128A of the said
Act.
Discussion:
[8] In M/s Tata Steel Limited vs Union of India delivered on 25.08.2026 the Hon’ble
Supreme Court has held as under:
“11. At the outset we have to notice that the proceedings under Section 73/74 can
be initiated only on the satisfaction of the Assessing Officer. Even if observations
/objections are made on audit, the Assessing Officer should enter his satisfaction
before a notice is issued. Insofar as a notice under Section 74, the satisfaction
should be not only of mismatch of ITC and short payment of tax having occurred,
as is alleged in this case, the Officer should be satisfied that either fraud/wilful
misrepresentation/ suppression had led to such mismatch or short payment of
tax.
14. It is not mere lip service to the provisions that is intended when an extended
limitation period is provided for recovering an excess benefit availed, short
payment or excess refund, from the assessee, especially when the allegation is of
fraud/willful misrepresentation/suppression. The foundational facts which led to
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the inference arrived at of fraud/willful misrepresentation/ suppression should be
evident from the notice itself. The mere employment of such words will not
indicate an application of mind, upon which alone the satisfaction can be arrived
at. The words are not to be mechanically recited in the notice to enable recovery
outside the normal limitation provided under the statute.”
[9] In the instant case, the first appellate authority has decided that for 2017-18 as
GSTR 9C and P/L accounts had been uploaded by the taxpayer there is no element of
suppression and section 74 is not applicable for such FY, whereas as the GSTR 9C and
the P/L account is not available with the department for 2018-19 and 2019-20 Section 74
is applicable for these two years.
[10] The appellant contradicts such observation stating that they did not file GSTR-9C
along with Profit and Loss Account as per Rule 80 of CGST rules due to an exemption on
the basis of their Annual Aggregate Turnover. In this respect the respondent has not made
any objection in the cross-objection filed by them. They have only stated that Appellant
had never denied any of the objections raised by the Audit team, rather paid all the
demand without any defence which further implies that the Appellant did not voluntarily
discharge their due tax liability in GST returns even after having complete knowledge of
their liability.
[11] The discrepancy as detected by the respondent is solely based on the documents
prepared and produced by the taxpayer. No incriminating documents or reports have
been detected by the respondent so that it can be inferred that the taxpayer wilfully
undisclosed the alleged discrepancy.
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[12] In the cross-objection the respondent has pointed out that since Audit was
conducted during 2023, after six (06) years from the implementation of GST Act, the
Appellant had ample opportunity to reassess their liability and discharge their liability
voluntarily during those six (06) years and therefore the plea of unintentional error caused
during the initial periods of introduction of GST. But it is apparent that initial statutory as
well as infrastructural issues followed by pandemic led to extension of time both in
favour of the taxpayers as well as the department for completion of due actions. Hence,
not discharging of liability suo motu before departmental audit not necessarily mean
wilful suppression. Action under section 74 should require definite evidential support
and it should be part of the SCN, vide instruction no. 5/2023-GST issued by CBIC.
[13] The ratio of the decision of the first appellate authority for consideration of the
case under section 73 instead of section 74 therefore holds equally good for 2018-19 and
2019-20 as pointed out in para no. 10 above.
[14] In view of above discussion, it is held that proceeding under section 74 of the
CGST Act, pertaining to SCN No. 202/2023-24 is not tenable.
[15] Resultantly, the action under Section 74 of CGST Act, 2017 is quashed. The
revenue is precluded from taking action for FY- 2017-18, as it has been time barred. The
order of the First Appellate Authority in respect of FY 2018-19 and 2019-20 is set aside.
Since we have decided that action under Section 74 of CGST Act, 2017 is not sustainable,
the matter is remanded back to the proper officer to determine the tax payable by the
appellant-taxpayer afresh in terms of Section 75(2) of CGST Act, 2017, deeming as if the
notice was issued under sub-section (1) of Section 73 of the CGST Act, 2017. The proper
officer shall complete the whole exercise after issuing notice to the appellant-taxpayer
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and providing him adequate opportunity of hearing preferably within a period of three
months from the date of communication of this order. The appellant-taxpayer may also
approach the concerned officer for the benefit under Section 128A of the CGST Act, 2017
and if such application is filed, the revenue will consider the application as expeditiously
as possible in terms of the law laid down in this regard. The appeal is, thus, disposed off.
SATYA GOPAL
CHATTOPADHYAY
Digitally signed by SATYA GOPAL
CHATTOPADHYAY
Date: 2026.11.06 15:16:26 +05'30'
S.G.Chattopadhyay
Judicial Member
Malay Ghosh
Technical Member
Digitally signed by MALAY
GHOSH
Date: 2026.11.06 15:24:23
+05'30'
MALAY GHOSH
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