Guardrails against Overreach

J the App by JustIDT takes look at the never ending saga. The Allahabad High Court has once again underlined a crucial safeguard in GST adjudication: Section 74 cannot be invoked without clear, reasoned findings of fraud or intentional tax evasion. In M/s S.A. Iron & Alloys Pvt. Ltd. v. State of U.P. the Court struck down a partially sustained demand after finding that neither the assessing authority nor the appellate authority had recorded even a basic finding of willful suppression or misstatement. This ruling reinforces the judicial stance that Section 74 carries a high evidentiary threshold and cannot be used as a default route for raising tax demands based on estimated or eye-based assessments. The revenue had initated Section 73 based adjudication proceedings which got dropped at the lower appellate level and then the department initated Section 74 proceedings for the same matter. And all on the bais of eye based assessment.