The Goods and Services Tax Appellate Tribunal (GSTAT), Bengaluru, has held that Section 76 of the Central Goods and Services Tax Act, 2017 applies to registered taxpayers who collect amounts representing GST from customers but fail to deposit them with the government.

The bench comprising Srikanth Venkatraman (Judicial Member) and Sudha Koka (Technical Member) rejected the view that the provision is confined to unregistered persons, exempt supplies or collections made without authority of law and restored the original adjudication order confirming a tax demand of ₹1,19,04,300, an equivalent penalty and applicable interest. It also upheld the rejection of ₹63,84,836 debited through the electronic credit ledger, which the adjudicating authority had treated as time-barred input tax credit.

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

The dispute arose from verification of the taxpayer’s returns for March to November 2019. According to the order, the company disclosed outward supplies and tax liability of ₹1,19,04,300 in GSTR-1 but failed to file the corresponding monthly GSTR-3B returns or deposit the tax.

The liability comprised IGST of ₹5,40,000 and CGST and SGST of ₹56,82,150 each.

The company’s GST registration was cancelled suo motu on November 20, 2019 for continuous non-filing of GSTR-3B returns. It subsequently commenced delayed filing on October 7, 2020.

The department issued a show cause notice on October 20, 2020 under Section 76, proposing recovery of the unpaid tax, interest and an equivalent penalty.

The Assistant Commissioner, Central Tax and Central Excise, Ballari Division, confirmed the tax demand and appropriated ₹55,19,464 paid through the electronic cash ledger.

However, the authority treated the remaining ₹63,84,836 debited through the electronic credit ledger as irregular. It held that the relevant GSTR-3B returns had been filed beyond the time limit prescribed under Section 16(4).

The authority also confirmed applicable interest and imposed a penalty of ₹1,19,04,300 under Section 76(2).

The restored demand must therefore be read alongside the appropriation of the cash payment already made.

The Additional Commissioner (Appeals), Belagavi, set aside the original order on June 20, 2023.

The appellate authority interpreted Section 76 as applying to situations such as collections by unregistered persons or composition dealers, collections on exempt supplies, or tax collected at higher rates.

It considered that non-payment of self-assessed tax by a registered person making taxable supplies should be addressed under Section 73 or Section 74, rather than Section 76.

The department challenged that interpretation before GSTAT.

Rejecting the restrictive interpretation, the tribunal emphasised that Section 76 refers to “every person” who collects an amount representing tax and fails to pay it to the government.

The bench observed that the provision requires remittance irrespective of whether the supplies concerned are taxable.

According to the tribunal, the first appellate authority had wrongly treated illustrative situations as exhaustive categories. A taxpayer’s registered status did not exclude it from Section 76 where actual collection and non-remittance were established.

The tribunal referred to R.K. Transport Private Limited v. Union of India and GAIL (India) Limited v. Commissioner of Central Excise in support of its reasoning that amounts collected as tax must be remitted to the exchequer.

A significant feature of the ruling was the reliance on banking evidence to establish actual collection, alongside invoices and return disclosures.

The department reported that five invoices issued to Corrtech International Limited involved taxable value of ₹6,31,35,000, with CGST and SGST totalling ₹1,13,64,300. Another invoice issued to Arham Construction involved IGST of ₹5,40,000.

Bank verification reports placed before the tribunal on October 14, 2026 showed customer remittances exceeding ₹3.24 crore against the invoices.

The tribunal treated the banking records, read with the invoices and GST return material, as establishing collection of amounts representing tax.

The ₹3.24 crore figure represented customer remittances; the tax demand restored by GSTAT was ₹1,19,04,300.

Having found that consideration inclusive of tax had been collected but the tax had not been deposited, the bench upheld the demand under Section 76, applicable interest and the equivalent penalty.

The tribunal also upheld the adjudicating authority’s treatment of the ₹63,84,836 electronic credit ledger debit.

It reasoned that entitlement to input tax credit under Section 16(4) is subject to a statutory time limit, and delayed filing beyond that deadline did not confer a right to utilise time-barred credit.

The order does not separately examine subsequent statutory relaxations concerning older-period ITC. Its conclusion records the finding reached in this particular appeal.

The taxpayer did not appear before the tribunal despite repeated notices.

The order records that notice was also affixed at its recorded address through a departmental panchanama. The department reported that the unit had shut down and its GST registration stood cancelled.

The bench held that reasonable opportunities of hearing had been provided and proceeded to decide the appeal ex parte on the available evidence.

GSTAT set aside the appellate order dated June 20, 2023 and restored the adjudication order dated October 11, 2021 in its entirety.

The ruling’s central feature is the finding of actual collection of amounts representing tax. The tribunal relied on invoices, GST return records and bank verification to uphold Section 76 proceedings against the registered taxpayer.

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: Collecting GST But Filing Nil Returns Attracts S. 76 Penalty Even For Registered Suppliers: GSTAT