Brush Maker’s GST Demand Stays At ₹97,610 As Agra GSTAT Rejects Department’s Bid To Restore ₹53.24 Lakh

In brief

The question

1. Whether the First Appellate Authority’s order was based on proper scrutiny of the relevant facts and records or suffered from an error warranting Tribunal interference.

The court held

The Tribunal dismissed the Department’s appeal as devoid of merit and upheld the First Appellate Authority’s order.

It also directed

It made no order as to costs; the order was pronounced on 5 November 2026 and directed to be communicated to the concerned parties.

01Facts

The Department appealed under Section 112(3) of the CGST/SGST Act against the First Appellate Authority’s order dated 14 July 2025, which had substantially reduced a demand raised against Nandnee Products under Section 73.

¶ 1–5

The Department challenged the reduction, relying on alleged discrepancies in returns, inadmissible input tax credit (ITC), and cancelled e-way bills.

¶ 6–10

The taxpayer maintained that it had produced books, invoices, and other supporting records before the First Appellate Authority, which had examined them.

¶ 11–14

02Issues

i.1. Whether the First Appellate Authority’s order was based on proper scrutiny of the relevant facts and records or suffered from an error warranting Tribunal interference.

¶ 15

ii.2. Whether the Department established grounds to restore the original demand, including in relation to ITC and cancelled e-way bills.

¶ 7–10, 18–21

03Law Applied

Section 112(3) of the CGST/SGST Act provides the basis for the Department’s appeal to the Tribunal.

¶ 1

Section 73 was the basis of the original demand proceedings.

¶ 3–4

Section 17(5) restricts ITC for specified blocked credits; the Tribunal considered whether the disputed credits fell within those restrictions, including the statutory restriction concerning certain motor-vehicle-related services.

¶ 19

The Tribunal’s stated approach was to assess whether the First Appellate Authority had properly examined the evidence and whether the Department demonstrated a factual or legal infirmity requiring interference.

¶ 15, 22

Provisions in the judgment · 3 · Linked ones open on LawLens

Central Goods and Services Tax Act, 2017 Section 112 Section 73 Section 17

04Reasoning

The Tribunal found that the First Appellate Authority had examined the taxpayer’s books and supporting documents rather than reducing the demand without scrutiny.

¶ 16–17

It upheld the treatment of job-work and repair expenses, finding the relevant invoices and business purposes supported the conclusions reached.

¶ 18

It also accepted that insurance of merchandise stock was not barred by Section 17(5), while agreeing that specified expenses not relating to furtherance of business were disallowed.

¶ 19

On capital goods, it upheld the allowance of the remaining credits after excluding credits relating to office chairs, wire, and a mobile phone.

¶ 20

As to the cancelled e-way bills, the Tribunal accepted the findings that clerical errors led to cancellation and that replacement e-way bills were issued promptly, supporting the conclusion that the cancellations did not establish suppressed turnover.

¶ 21

The Department failed to identify any material error in those findings.

¶ 22