The Goods and Services Tax Appellate Tribunal (GSTAT), State Bench at Agra, has dismissed a departmental appeal against an order setting aside a GST demand and penalty of ₹11,340, holding that the Revenue failed to establish its allegation that the disputed business was non-existent or had evaded tax.

The Bench of Ajeet Singh (Judicial Member) and Vivek Kumar (Technical Member) upheld the first appellate authority’s decision after finding that the firm existed at an identified business address, held GST registration and had filed returns for the relevant period. The Tribunal concluded that the proper officer had failed to examine the facts and circumstances in their proper perspective. 

Buy Now: 195+ ITC Judgements Along With GSTAT Rulings – 2017 To 2026

The departmental appeal arose from an order dated August 19, 2025, passed by the Additional Commissioner, Grade II, Appeal III, State Tax, Agra. Through that order, the first appellate authority had allowed the taxpayer’s appeal and set aside the tax and penalty imposed under Section 74 of the Central Goods and Services Tax Act, 2017, and the Uttar Pradesh Goods and Services Tax Act, 2017.

The dispute concerned an inward supply of ₹31,500 reflected in invoice No. 05 dated January 20, 2022, relating to the financial year 2021–22.

According to the Revenue, verification on the GST portal indicated that the disputed firm was bogus or non-existent. The department further alleged that no goods had actually been purchased and that the transaction had been reflected with an intention to improperly claim tax credit.

A show cause notice was issued, but no response was submitted. The proper officer subsequently passed an ex parte order raising a demand of ₹2,835 each towards CGST and SGST, together with equivalent penalties. The total demand consequently amounted to ₹11,340.

The first appellate authority overturned that order, finding that the proper officer had failed to consider relevant documents. The department then challenged the appellate relief before the Tribunal. 

Before the Tribunal, the departmental representative maintained that the firm was non-existent. The Revenue’s challenge rested principally on two grounds: the alleged non-existence of the business and the assertion that no goods were found at its premises at the relevant time.

The Tribunal examined whether the first appellate authority had correctly allowed the taxpayer’s appeal.

In assessing the department’s allegations, the Bench distinguished between a claim that a firm was bogus and the evidence concerning its actual existence. It observed that a firm could be regarded as bogus on the ground of non-existence only where it did not exist.

On the facts before it, however, the disputed firm held GST registration and operated from premises at 19A, Radha Vihar, Kamla Nagar, Agra. The order also recorded that its business involved manufacturing different items. 

The Bench also took account of GSTR-1 and GSTR-3B returns filed for the relevant period, as recorded in the first appellate authority’s findings.

After examining the record, the Tribunal concluded that the Revenue had failed to show that the taxpayer had evaded any amount of tax. It therefore found no basis to interfere with the appellate authority’s decision.

The absence of a reply to the show cause notice formed part of the background to the ex parte assessment. Nevertheless, the Tribunal’s decision turned on the evidence available on record and the proper officer’s failure to consider the relevant facts and documents adequately.

The Bench held that the first appellate authority had rightly set aside the tax and penalty demand of ₹11,340. It answered the issue framed for consideration in favour of the taxpayer and against the Revenue. 

The Tribunal dismissed the departmental appeal and upheld the findings of the first appellate authority. It made no order as to costs and recorded that no interim application remained pending.

Membership Required to Access Case Details & Order Copy

To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.

Read More: GST Demand Can’t Rest on Bogus Firm Allegation Without Proof of Tax Evasion: GSTAT