Exoneration in Section 73 proceedings by State GST authorities would not ipso facto bar Central GST authorities from initiating proceedings under Section 74

Last updated: 08 June 2026

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The Delhi High Court has ruled that if State GST authorities close proceedings under Section 73 of the CGST Act in favour of a taxpayer, this does not automatically prevent Central GST authorities from initiating their own proceedings under Section 74. The court clarified that Sections 73 and 74 operate in different contexts, with Section 74 dealing with cases involving fraud or wilful misstatement. The High Court also emphasised that appeals are the appropriate venue for disputing the appreciation of evidence, rather than writ petitions.

Court :
Delhi High Court

Brief :
The Hon'ble Delhi High Court in PEI Industries v. Union of India & Ors. [W.P.(C) 7725/2026 & CM APPL. 37364/2026 dated May 29, 2026] dismissed the writ petition challenging the Order-in-Original dated March 30, 2026 passed under Section 74 of the Central Goods and Services Tax Act, 2017 ( "the CGST Act" ) and held that Section 73 and Section 74 of the CGST Act operate in altogether different arenas, and merely because the assessee was exonerated in proceedings under Section 73 by the State GST authorities, the same would not, by itself, preclude the Central GST authorities from proceeding against the assessee under Section 74 of the CGST Act. The Court further held that appreciation and re-appreciation of evidence squarely fall within the domain of the Appellate Authority and the availability of an effective statutory appellate remedy precluded exercise of writ jurisdiction under Article 226 of the Constitution of India.

Citation :
W.P.(C) 7725/2026 & CM APPL. 37364/2026 dated May 29, 2026

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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