Sanjeeb Kumar Dehuri vs MUKESH KUMAR KAKANI

GSTAT

State Bench Cuttack
Division Bench Court No. Court II
APL/5/CTT/2026
SANJEEB KUMAR DEHURI .............Appellant
Versus
MUKESH KUMAR KAKANI, PROPRIETOR, MAIN ROAD
MAIN ROAD JHARSUGUDA ODJHA 768201 .............Respondent
Quorum
Hon’ble Suchismita Misra, Member(Judicial)
Hon’ble Ananda Satpathy, Member (Technical)
Counsel for Appellant
MANIKANT
Counsel for Respondent
Form GST APL-04A
[See rules 113(1) & 115]
Summary of the order and demand after issue of order by the GST Appellate Tribunal
whether remand order : Yes
Order reference no. : ZN620271026000060H Date of order : 29/10/2026
1. GSTIN/Temporary ID/UIN - 21ADEPK8556A1ZY
2. Appeal Case Reference no. - APL/5/CTT/2026 Date - 14/01/2026
Name of the appellant - Sanjeeb Kumar Dehuri , [email protected] ,
3.
9861084824
Name of the respondant -
4.
1. MUKESH KUMAR KAKANI , [email protected] , 9437255559
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5. Order appealed against - AD210524014663I
(5.1) Order Type - Demand Order
(5.2) Ref Number - ZD2101250013937 Date - 02/01/2025
6. Personal Hearing - 29/10/2026 15/10/2026 08/10/2026 17/09/2026
Order in brief - Demand has been confirmed under Section 74 for failure to file seven
consecutive returns. Pending returns filed a day after enforcement action under Section
67. Net Tax liability to be discharged in cash constitutes 1.30% of the gross liability. No
issue raised in regard to taxable turnover, rate of tax or ITC availed in the returns filed
after inspection under Section 67. Estimated cash liability amount was reportedly
deposited much before the date of visit. Proceeding under Section 74 concluded with
NIL demand on account of tax and interest, but penalty levied under Section 74 by
treating the filing of the delayed returns after enforcement action, as an act of
suppression. In the impugned Appeal Order legality of invoking Section 74 by the
adjudicating officer has not been upheld. The impugned order holds it a fit case for
invoking Section 73. With such observation, the impugned order proceeded further to
determine the penalty amount under Section 73. Appeal preferred seeking restoration of
the demand confirmed under Section 74 of the Act. On Appeal, justiciability of invoking
of Section 74 was not found due to complete absence of the statutory conditions required
to be present for invoking Section 74, thus finding no ground to interfere with the
findings in the First Appeal Order to the extent of not upholding invocation of Section
74. The second part requires interference in view of the provisions of Section 75(2) of
the Act which confers the jurisdiction for fresh determination of demand under Section
73 on the proper officer, or the Original Adjudicating Authority in this case. In the result,
the impugned Appeal order is set aside and remanded back to the Adjudicating Authority
for fresh determination of liability, if any, under Section 73 of the Act.
7.
Summary of Order
8. If demand order then whether demand quantified: No
For Other orders and Demand orders which are not
9.
quantified:
Issues as determined by
Appellate/Revisional
authority
Order by GST Appellate
Tribunal
Issues as raised by proper officer
2

Mere filing of seven
consecutive returns after
inspection under Section 67
has not been held as
suppression. Invocation of
Section 74 is not found
justifiable. As per Section
75(2), once invocation of
Section 74 not found
justified, demand has to be
determined afresh under
Section 73 by the Proper
Officer only. Appeal set
aside and remanded to the
Adjudicating Authority for
determination of demand
afresh under Section 73.
Mere filing of seven
consecutive returns after
inspection under Section 67
has not been held as
suppression. Invocation of
Section 74 was not upheld.
Penalty demand modified
and determined under
Section 73.
Filing of seven consecutive
returns after inspection under
Section 67 has been held as
suppression. Proceeding
completed under Section 74
demanding penalty only and with
no demand on account of Tax
and Interest.
10. If remanded with directions:

a) Remanded to: Adjudicating Authority
b) Directions subject to which remanded, if any:

To determine afresh liability, if any, under Section 73 of
the Act.

Place :CUTTACK
Date : 29.10.2026





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ORDER
Per: Ananda Satpathy (Member Technical, State)
1. The instant Appeal order is being passed under Section 113(1) of the Central
Goods and Services Tax Act, 2017, or the Act in short.

2. Appeal has been filed under section 112(3) of the said Act, on the directions of
the Commissioner of CGST & Central Excise, Rourkela.
3. The case was listed for hearing on 15-10-2026. Learned Counsel appearing for
the Appellant was heard at length and hearing was completed in the absence
of the Respondent. The order impugned passed under section 107(11) of the
Act, or the OIA in short, the underlying Adjudication order passed under
section 74 of the Act, or OIO in short, the grounds of appeal as enumerated in
the review note of the Commissioner were examined with reference to the
relevant provisions in the Act and the Rules framed there under.

4. As revealed from the submission made in the grounds of appeal and the
submissions made in the course of hearing, the OIO, and the OIA, the relevant
facts and the background of the case, in brief, are as follows: -

I. The Respondent, M/s.Bharat Super market, represented by Mukesh Kumar
Kakani is registered under the Act for supply of different FMCG goods on
retail sale basis.
II. The Respondent, reportedly, failed to file the periodical Returns required
to be filed under the Act for the tax periods(month) from August 2017 to
February 2017, on the prescribed due date
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III. Due to such prolonged failure on the part of the Respondent to file the
aforementioned seven returns, officials of the Anti-Evasion wing of the
Commissionerate visited the business premises on 19.04.2018 and
reportedly on their persuasion, the pending returns from August 2017 to
January 2018 were filed on 20.04.2018. The pending return for February
2018 was filed on 06.06.2018.
IV. Before filing the pending returns, the Respondent, reportedly, estimated
the liability of the pending returns to be paid in cash and deposited the
estimated cash amount on 31.03.2018, i.e., before the business premises
was visited by the officials of the anti-evasion wing.
V. Despite filing of the pending returns with full discharge of the return
liability, a show cause notice under section 74 has been issued calling
upon the respondent to pay the amount already paid along with the return,
together with interest under Section 50(1) of the Act and penalty equal to
the amount of tax under Section 74(1) of the Act.
VI. The Respondent did not participate in the adjudication proceeding despite
issue of SCN followed by reminders to state his case. Consequently, the
following demand was confirmed ex parte, on account of tax, interest and
penalty under section 74 (9) of the Act for allegedly suppressing material
fact by way of persistently failing to file the periodical returns for more than
seven months, thus violating the mandate in Section 39 and hampering the
revenue interest of the State.
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Tax
Interest
Penalty
Total
(CGST+SGST+
(CGST+SGST+Ce
(CGST+SGST+Cess)
(CGST+SGST+Ces
Cess)
ss)
s)
73,58,992 As per
73,58,992 1,47,17,984
Section
50(1)

VII. While confirming the demand as above, an appropriation order has been
passed in the OIO to appropriate Rupees 73,58,992/- already paid by the
Respondent (at the time of filing the pending returns) implying thereby,
there was no effective demand on account of Tax.

VIII. Being aggrieved with by aforementioned penalty demand, the Respondent
preferred appeal under section 107(1) of the Act contesting the demand as
well as the grounds of demand on account of tax, interest and penalty.
IX. In the OIA passed under section 107(11) of the Act, the demand has been
modified to the extent tabulated below by not upholding the
maintainability of Section 74 and reducing the penalty amount to ten
percent of the tax demand as per Section 73(9) of the Act.
Tax (CGST+SGST) Interest
Penalty
Total (CGST+SGST)
(CGST+SGST)
(CGST+SGST)
0 0 7,35,900 7,35,900

X. Being aggrieved with the extent of relief in the OIA, the Appellant preferred
the instant appeal seeking restoration of the demand confirmed in the OIO
by upholding the legality of invoking Section 74 of the Act for confirming the
demand on account of penalty.
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5. The Appellant contests the impugned appeal on the following grounds: -

i. That the Additional Commissioner (Appeals) has erred in law and
facts by holding that the provisions of Section 74 of the CGST Act
were not invokable on the ground that the non-filing of returns and
payment of tax after investigation do not constitute "suppression of
facts" or "wilful misstatement".
ii. That the adjudicating authority had rightly invoked Section ‘74,
having observed that the respondent failed to file GSTR-3B and
GSTR-1 returns for the period August 2017 to February 2018 and
discharged tax liabilities only after search was conducted under
Section 67. The delayed compliance was clearly a result of
departmental action, and not voluntary. In the case of Union of
India v. Rajasthan Spinning & Weaving Mills, 2009 (238) E.L.T. 3
(S.C.), the apex court has held that Wilful suppression and evasion
exist if the assessee complies with the law only after being caught.
In the instant issue, Bharat Super Market filed GSTR-3B and paid
GST only after the anti-evasion search, which reflects lack of bona
fides and invocation of Section 74 is valid.

iii. That the Additional Commissioner (Appeals) failed to appreciate
that the very essence of suppression and intent to evade is
established when a taxable person fails to file statutory returns and
pays tax only upon being subjected to enforcement action. The
timing of tax payment—immediately after search—demonstrates
reactive and not bona fide conduct.
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iv. That reliance placed by the respondent and the Additional
Commissioner (Appeals) on Supreme Court decisions under
erstwhile Central Excise laws was misplaced in the context of the
GST regime, where filing of returns is central to tax administration,
and non-compliance thereof disrupts revenue flows and
undermines the self-assessment mechanism. Burden of proof for
absence of suppression lies on assessee once defaults are evident.
In the case of Kaur & Singh v. CCE (1997 (94) E.L.T. 289 (S.C.),the
apex court has held that, when facts such as non-filing are
admitted, the burden shifts to assessee to rebut presumption of
suppression. In the instant case, Bharat Super Market failed to
provide any reasonable explanation for non-compliance for such a
long period.

v. That Section 74 Explanation (2) clearly includes cases of non-filing
of returns as a species of "suppression’, when accompanied by
intent to evade, which was rightly presumed in this case
considering the tax amount involved (¥73.58 lakhs), the duration (7
months), and the absence of any proactive disclosure or intimation.

vi. That the assertion that tax was deposited in the cash ledger on
31.03.2018 does not absolve the respondent from liability under
Section 74, as mere ledger credits without filing returns or
disclosing tax liability in GSTR-3B hold no legal validity. No self-
assessed tax was reported until after the search.
8

vii. That the Additional Commissioner (Appeals) exceeded jurisdiction
by reclassifying the nature of the offence and reducing penalty
under Section 73(9), despite clear facts warranting invocation of
Section 74 as correctly done by the original authority. It is settled
law that benefit of doubt cannot be extended when suppression of
facts is established.
6. In the course of hearing, the Learned AR appearing for the appellant, while
reiterating the averments made in the grounds of appeal, drew the attention of
the Tribunal to section 75(2) of the Act and contested the modification of the
penalty amount by the appellate authority even while section 75(2) of the Act
confers such power to determine the demand amount under section 73 of the
Act on the proper officer who confirmed the original demand under section 74
of the said Act.

7. No cross objection (CO) has been filed by the Respondent.
8. Examination of the grounds of appeal vis-à-vis the grounds in the impugned
OIA and the underlying OIO, reveals the following –


i. The impugned OIA does not uphold the maintainability of invoking
74 of the Act on the only ground of filing of the pending returns and
payment of tax after investigation by holding that, such delayed
filing of the pending returns after enforcement action, does not
constitute "suppression of facts" or "wilful misstatement".

ii. In the grounds of appeal, it is contended that, filing of the pending
periodical returns for the periods from Aug, 2017 to February, 2018
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after enforcement action by the department is an act of
suppression with intent to evade tax.
iii. Filing of returns is central to tax administration, and non-
compliance thereof disrupts revenue flows and undermines the
self-assessment mechanism.

iv. Burden of proof for absence of suppression lies on the assessee,
once defaults are evident.
v. That, Section 74 Explanation (2) clearly includes cases of non-filing
of returns as a species of "suppression’, when accompanied by
intent to evade, which was rightly presumed in this case
considering the tax amount involved (¥73.58 lakhs), the duration (7
months), and the absence of any proactive disclosure or intimation.
vi. That, the assertion that tax was deposited in the cash ledger on
31.03.2018 does not absolve the respondent from liability under
Section 74, as mere ledger credits without filing returns or
disclosing tax liability in GSTR-3B hold no legal validity. No self-
assessed tax was reported until after the search

9. For deciding the issues enumerated above, the statutory scheme governing
filing of returns including action against non-filers, and determination of tax
not paid/short paid for demand and recovery is required to be examined with
reference to the facts revealed from the record. As per the statutory scheme,
(i) Section 39 of the Act read with rule 61 of the rules framed there-under,
mandates filing of returns by normal registered taxpayers every month
in Form GSTR-3B by the twentieth day of the succeeding month.
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(ii) In the event of returns not filed by any registered taxpayer, notice is
required to be issued under section 46 of the Act in form GSTR-3A.
(iii) If the return in default is not filed after issue of notice under section 46
0f the Act, there is provision for best judgement assessment of the tax
liability of the return defaulter for the period of default.

(iv) As evident from the OIO, there is no mention of any such action having
been taken as per the statutory scheme for the returns in default for the
periods from August, 2017 to February, 2018.

(v) Instead of the statutory process envisaged in the Act and the rules
framed there-under to enforce filing of the returns in default, inspection
under section 67 of the Act has been preferred and undertaken on
19.04.2018.
(vi) The taxpayer or the respondent in this case, filed the pending returns
with full discharge of the return liability. Even interest payable on the
amount of liability discharged in cash, has also been reportedly paid as
is evident from no allegation on that account.
(vii) In spite of full discharge of the return liability on 20.04.2018, and even
while no tax amount apparently remained outstanding for recovery,
proceeding under section 74 of the Act has been initiated on
27.12.2022 alleging “wilful mis-statement”, or “suppression of fact”
with an intent to evade tax.
(viii) The proceeding so initiated under section 74 of the Act has been
concluded ex parte by confirming the tax demand as was admitted and
paid in the returns filed by the respondent, thus implying that, no
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amount remained outstanding for recovery on the day the proceeding
was initiated as well as on the day the proceeding was concluded so as
to justify any action under section 74 or for that matter, under section
73 as well. However, the maintainability of section 74 being the only
disputed issue in the instant appeal, the scope of the appeal is kept
limited to that only.
(ix) The relevant portions of Section 74 of the Act, as has been relied upon
by the appellant, reads as follows :-
“ Section 74. Determination of tax not paid or short paid or erroneously
refunded or input tax credit wrongly availed or utilised by reason of fraud
or any willful- misstatement or suppression of facts.-

(1) Where it appears to the proper officer that any tax has not been paid or short
paid or erroneously refunded or where input tax credit has been wrongly
availed or utilised by reason of fraud, or any wilful-misstatement or
suppression of facts to evade tax, he shall serve notice on the person
chargeable with tax which has not been so paid or which has been so short
paid or to whom the refund has erroneously been made, or who has wrongly
availed or utilised input tax credit, requiring him to show cause as to why he
should not pay the amount specified in the notice along with interest payable
thereon under section 50 and a penalty equivalent to the tax specified in the
noti ce.
xxx xxxx xxx
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Explanation 2 .- For the purposes of this Act, the expression "suppression"
shall mean non-declaration of facts or information which a taxable person is
required to declare in the return, statement, report or any other document
furnished under this Act or the rules made thereunder, or failure to furnish any
information on being asked for, in writing, by the proper officer .”
As evident from the reading of Section 74, as above, it can be invoked only
when the amount of tax allegedly not paid is caused by an act of
Fraud, or
Willful mis-statement, or
Suppression
with an intent to evade tax, implying thereby it is mandatory to bring on
record, commission of a fraud or instance (s) of willful mis-statement of
any specific information, or suppression of any material fact with an intent
to evade tax. Now, putting the mandatory conditions required to be
fulfilled to the case in hand to examine the sustainability of the
proceeding, it is found that-

i. The taxpayer (the respondent in this case) has to discharge the
return liability mandated in section 39 of the Act in time.
ii. Nevertheless, the estimated return liability required to be
discharged in cash has been deposited on 31.03.2018 whereby the
revenue interest of the administration has been safe guarded to
13

some extent and the act of such deposit having been occasioned of
own volition, it, at least, is inclined towards the good conduct of the
taxpayer.
iii. As evident from the table at Para 6.4 of the OIO, the respondent
taxpayer discharged the full return liability amounting to Rs
73,58,992.00 out of which, the amount paid from the cash ledger
was Rs 96,012.00 only, which is a miniscule 1.30% of the total
liability. It needs no elaboration that, the cash component of the
return liability, or the net tax liability, is the amount actually
available for appropriation by the Government, on filing of the
return.
iv. It is further revealed from Para-7 of the OIO that, the interest
liability arising out of the delayed discharge of return liability in
cash has been paid by the respondent before commencement of
the proceeding under section 74 of the Act.
v. As revealed from form the impugned OIA, the respondent
reportedly deposited Rs 1,10,673/- [SGST: 85,573 + Late Fee: 25,100]
on 31.03.2018 i.e., on the closing date of the ongoing financial year
as per estimated liability to be discharged in cash, thus implying
that the revenue interest, as apprehended by the appellant, of the
Government is secured.
vi. With such deposit before the commencement of any inspection or
audit, the intent of the taxpayer of not withholding the net tax
liability is well demonstrated. Contrary to the assertion of the
14

appellant, the amount deposited under any head of GST goes
directly in to the revenue account of the respective Government;
whether or not the amount is debited against any return liability or
any other liability. With the filing of return by debiting the
cash/credit ledger as per the statutory scheme, the return liability
is only settled. It has no implication on the credit of the amount
deposited in to respective Government account.
vii. On the statutory front, while no fraud has been alleged, there is
allegation of both “willful mis-statement” and “suppression”
without specifying either. Nevertheless, from the reading of the
grounds of appeal in its totality, it appears to be “suppression”
only, as evident from the emphasis laid on Explanation 2 of Section
74 of the Act.

viii. On analysis of the Explanation2, as above, it is seen that a case for
suppression arises only after filing of the statutory returns and
statements as evident from the wordings “ the expression
"suppression" shall mean non-declaration of facts or information
which a taxable person is required to declare in the return,
statement, report or any other document furnished under this Act
or the rules made thereunder” . As per the Explanation, information
not declared in the return, statement, report or document “furnished
under this Act or the rules made thereunder” would amount to
suppression, implying thereby, a case for suppression would arise only
after the filing of the statutory returns and statements, and only if any
15

material information that ought to have been declared, has not been
declared in the statutory returns and statements filed under the Act. In
the case in hand, the return turnover and the return liability having been
accepted and taken for determining the tax “allegedly not paid”, there
is no case for any material information relating to the taxable turnover,
or rate of tax, or the amount of ITC availed to be “mis-stated” or
“suppressed”. Besides, there is no allegation of any information having
not been furnished on call. Thus, Explanation 2 of Section totally fails
in its applicability to the case in the present appeal.
On analysis of section 74(1) of the Act and the Explanation-2 thereof,
10.1.
with reference to the relevant facts concerning the conduct of the
respondent taxpayer, it is evident that, prior to the commencement of
the proceeding under section 74 of the Act, the respondent taxpayer
had filed the pending seven returns with full discharge of liability
(98.7% out of the ITC ledger) leaving no amount remaining outstanding
for recovery. As evident from the underlying OIO, the turnover and
liability declared in the returns have been accepted as correct and the
same turnover and liability have been reiterated in the OIO. This
demonstrates correct declaration of the taxable turn-over, rate of tax
and the tax liability, thus negating the allegation of mis-statement,
much less willfully. It also negates the allegation of suppression in
terms of its elucidation in the Explanation -2. Thus, mere failure to file
seven monthly returns within the prescribed time without any evidence
16

establishing the aforesaid statutory ingredients, cannot by itself
sustain the invocation of section 74 of the Act.
Even the amount required for discharge of the net-tax return liability
10.2.
has been reportedly deposited on 31.03.2018, which is prior to the
commencement of inspection action on 19.04.2018, thus safeguarding
the revenue interest of the Government, apprehended in the grounds
of appeal. Such conduct of the taxpayer is rather inclined towards his
intent of not to withhold the net amount due to the Government.
The interest payable on such delayed discharge of return liability in
10.3.
cash has been reportedly paid before commencement of the
adjudication proceeding. Such conduct on the part of the respondent
further demonstrates his compliant nature. Of course, such
observations on deposit of estimated cash liability on 31.03.2018 and
full discharge of the interest liability is subject to verification of the
payment records. Nevertheless, such conduct of the respondent is
heavily inclined towards his compliant nature.

10.4. Accordingly, the order impugned is upheld to the extent it holds that
section 74 is not legally invocable against the respondent.
As regards applicability of Section 75(2) read with section 73, the next
10.5.
part of the impugned appeal order modifying the penalty amount is set
aside and remanded back to the original adjudicating authority for
determination of liability, if any, under section 73 of the Act and such
determination shall be subject to the statutory limit.
17

10.6. The final order as above is pronounced in the open court today i.e., on
29.10.2026.

10.7. The appeal is, thus, disposed of.

(Ananda Satpathy) (Suchismita Misra)


Dated: 29.10.2026














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