Applicability of Section 73 and Section 74 [GST] in various situations - Hon'ble Karnataka High Court Judgement

Amit Kumar Agrawal
Jul 21, 2025By Amit Kumar Agrawal

Short payment of GST due to non-receipt of GST portion from PWD by government contractor cannot be treated as suppression; impugned order passed under Section 74 to be treated as passed under Section 73, as case involved no fraud or willful misstatement.

Basavaraj V. Sajjan. v. DD, ADG (DGGI) [You can download complete copy of judgement from this link]

Analysis

If you're dealing with a show-cause notice or an order under Section 74 for short payment of GST due to non-receipt from customer, you can argue for reclassification under Section 73, based on:

  • Absence of fraudulent intent
  • Transparent invoicing and disclosures
  • Judicial precedents supporting bona fide conduct
     

This judgement has:

  • drawn a line between applicability of section 73 and section 74 of the Acts
  • provided guidance to adjudicating authorities to excercise such powers.