GST UPDATE

Hon’ble Authority: CESTAT, Kolkata
Case Title: M/s Jeetu Madnani v. Commissioner of CGST & Central Excise, Kolkata
Appeal No. & Citation: ST Appeal Nos. 75164 & 75165 of 2026

Hon’ble Judge(s)	Shri K. Anpazhakan (T)
Date of Order	25.03.2026
Outcome	In favour of the appellant

Brief Facts of the Case

M/s Jeetu Madnani, the appellant, was regularly filing ST-3 returns and paying Service Tax up to 30.06.2017, and thereafter transitioned to GST. Based on the mismatch between the figures reflected in the appellant's Form 26AS / Income Tax Returns (ITR) with the figures declared in its ST-3 Returns, the department issued two Show Cause Notices for the period October 2014 to March 2015 and April 2015 to June 2017 by invoking the extended period of limitation under Section 73 of the Finance Act, 1994. The Adjudicating authorities confirmed the demand of tax, interest and penalties for both the notices which were upheld by the appellate authorities which prompted the appellant to approach CESTAT.

Question before Hon’ble Court / Authority

Whether the extended period of limitation under Section 74 of the Finance Act, 1994 could validly be invoked where the alleged mismatch was based solely on a comparison of Form 26AS/ITR data against ST-3 returns, without independent investigation?
Whether a second SCN could invoke the extended period of limitation for a subsequent period, when the same issue had already been the subject of an earlier SCN invoking the extended period.

Brief Arguments by Appellant

A departmental audit had already covered the entire disputed period (April 2014 to June 2017) and no objection regarding any mismatch between ITR/Form 26AS and ST-3 figures was pointed out.
The Department had not carried out any independent inquiry into the nature of services rendered corresponding to the differential value — the entire demand was based purely on a mechanical comparison of income-tax data against ST-3 returns.
All transactions were reflected in the appellant's books of accounts, balance sheets, ITRs and TDS statements, all of which were already available with the Department. Therefore, in the absence of any established suppression of facts or wilful misstatement, invocation of the extended period of limitation was not justified.
Since the first SCN had already invoked the extended period on the identical issue, the Department could not invoke the extended period again in the second SCN.

Brief Arguments by Respondent

The Revenue alleged that the appellant had willfully suppressed taxable value with intent to evade payment of Service Tax and therefore the extended period was rightly invoked.

Findings and Judgement

On the issue of Suppression of facts
The Tribunal observed that the appellant was regularly filing its returns. Further, the department had not conducted any independent verification to determine the actual nature of the services or the real taxability of the differential amount, rather the demand was raised merely on the basis of a data comparison between Form 26AS/ITR and ST-3 returns. Furthermore, no evidence to prove suppression or wilful misstatement on the part of the appellant was submitted by the department. Therefore, the essential ingredients necessary to invoke Section 73's extended period that is fraud, collusion, wilful misstatement, or suppression of facts with intent to evade tax were wholly absent, the demand could not sustain.
Issue of Invocation of extended period on Subsequent SCN
Tribunal observed that all material facts were already within the knowledge of the Department at the time of issuing the first SCN. Based on the Supreme Court's ruling in case of NizamSugarFactory, it held that once an SCN invoking the extended period has been issued on an issue, the Department cannot issue a second SCN invoking the extended period again on the same issue for a subsequent period. Therefore, the order confirming the demand was quashed.

Cases Relied Upon

Case Laws	Citation
Nizam Sugar Factory v. Collector of Central Excise	AP = 2006-TIOL-56-SC-CX
Bimal Auto Agency v. Commissioner of CGST & CX, Dibrugarh	[(2023) 10 Centax 55 (Tri.-Cal.)] = 2023-TIOL-614-CESTAT-KOL
Balajee Machinery v. Commissioner of CGST & Excise, Patna-II	[2022 (66) G.S.T.L. 440 (Tri.-Kol.)] = 2022-TIOL-778-CESTAT-KOL

Author’s Comment

However, in one of our earlier updates on the Delhi High Court's decision in M/s PEI Industries and Various Ors. v. Union of India & Ors. (W.P. No. 7725 of 2026), the Court had taken a different view. It held that Sections 73 and 74 are separate provisions, operating in different fields and based on different legal ingredients. Therefore, closure of proceedings under one provision does not automatically prevent proceedings under the other, even if they arise from the same transactions, where the legal basis is different. Accordingly, the Court held that merely because the petitioners had been exonerated by the State GST authorities under Section 73, the Central GST authorities were not barred from initiating or continuing proceedings under Section 74 on the same transactions. This update has received many comments from our vigilant readers about this decision.

Comments

GST update /2026-27/0050