India’s newly constituted Goods and Services Tax Appellate Tribunal (GSTAT) has passed its first order, marking an important milestone in the evolution of GST dispute resolution.
The Tribunal dealt with a GSTR-1 vs GSTR-3B mismatch dispute relating to FY 2018-19, and adopted a practical and taxpayer-friendly approach in light of the early GST implementation period.
Case Title
M/s Sterling & Wilson Pvt. Ltd. v. Commissioner, Odisha
Forum
Goods and Services Tax Appellate Tribunal (GSTAT)
Principal Bench, New Delhi
Appeal No.
APL/1/PB/2026
Date of Order
11 February 2026
Nature of Dispute
The dispute arose due to a mismatch between outward supplies reported in:
- GSTR-1, and
- GSTR-3B
for the Financial Year 2018-19.
The Department initially issued proceedings under:
- Section 74 (fraud/suppression/wilful misstatement)
However, later the allegation of fraud/suppression was not sustained.
Key Legal Issue
Whether tax demand can continue under Section 74 when fraud/suppression is dropped, or whether the Proper Officer must proceed under Section 73.
Tribunal’s Findings
1. Section 74 Cannot Survive Once Fraud Allegation is Dropped
The Tribunal held that once the Department drops the charge of fraud or suppression, the proceedings must shift from:
- Section 74 → Section 73
This is mandatory due to the operation of:
- Section 75(2) of the CGST Act
2. Mandatory Redetermination Under Section 73
The GSTAT observed that the Proper Officer is required to re-determine tax liability under Section 73 once Section 74 is ruled out.
Thus, the demand cannot be mechanically confirmed.
3. Practical Approach Considering Early GST Period + Covid Constraints
The Tribunal acknowledged that FY 2018-19 was a period marked by:
- initial GST implementation challenges
- lack of stabilised compliance systems
- subsequent Covid-related disruptions
Therefore, a strict penal approach was not justified.
4. 30 Days Granted for Reconciliation
The Tribunal granted the taxpayer:
- 30 days’ time
to reconcile mismatches and make necessary amendments/rectifications.
Final Decision
The matter was remanded back to the Proper Officer with directions to:
- proceed under Section 73, and
- allow reconciliation/amendment opportunity within 30 days
Significance of the Order
This first GSTAT ruling is significant because:
- It clarifies the mandatory transition from Sec. 74 to Sec. 73
- Reinforces procedural safeguards under Sec. 75(2)
- Sets the tone for a balanced tribunal approach
- Provides relief in mismatch disputes from the early GST era
Key Takeaways
- Fraud allegation dropped → Section 74 demand cannot continue
- Proper Officer must re-determine tax under Section 73
- GSTAT is adopting a practical compliance-oriented approach
-
Taxpayers must be given reconciliation opportunity