Madras HC Quashes GST Assessment Order u/s 74 as Cryptic

The petitioner challenged an order passed under Section 74 of the TNGST Act for AY 2022-23. The order followed notices in DRC-01A dated 14/05/2024 and DRC-01 dated 29/05/2025, to which the petitioner had replied and also appeared for a personal hearing. Five defects were raised; four were dropped, and demand was confirmed only on defect No. 5.

Defect No. 5 related to short payment of GST by charging 12% instead of 18% as per Notification No. 03/2022–Central Tax (Rate) dated 13/07/2022. The petitioner contended that the work had been completed in 2020, and that the invoice dated 30/07/2022 was raised only for record regularisation. On this basis, it was argued that the higher GST rate could not be imposed. The department submitted that opportunity had been given but no evidence was produced to prove completion of work before the notification.

Issue Raised: Whether confirmation of demand under Section 74 at 18% GST could be sustained when the assessee claimed the work was completed before the 13/07/2022 notification, but the assessment order was cryptic and non-speaking on this point.

Court’s Decision : The Court held that the impugned order was cryptic insofar as defect No. 5 was concerned and quashed it to that extent. It directed the authority to re-do the exercise after affording the petitioner an opportunity to produce documents proving completion of the work before the notification changing the rate from 12% to 18%.

It was further clarified that if the petitioner fails to produce the required documents, the authority would be at liberty to reconfirm the demand. On penalty under Section 74, liberty was reserved to challenge the same after passing of the final order. The writ petition was disposed of on these terms and the connected miscellaneous petitions were closed.

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