Supreme Court Upholds 100% GST Penalty for Wilful Suppression of Facts Over Non-Filing of Monthly Returns

The Supreme Court has upheld 100% GST penalty for wilful suppression of facts over non-filing of monthly returns. The Andhra Pradesh High Court has upheld the imposition of a 100% penalty under Section 74 of the CGST Act, holding that the assessee’s failure to file mandatory monthly returns and remit GST dues amounted to wilful suppression of facts with an intention to evade tax. The writ petition challenging the penalty order was dismissed, and the consequential recovery proceedings initiated by the authorities were sustained. Subsequently, the assessee approached the Supreme Court of India by filing a Special Leave To Appeal (C) questioning the High Court ruling. However, the Supreme Court found no merit in the challenge and dismissed the petition, thereby affirming the decision of the High Court. The Supreme Court held, “No good reason to interfere with the impugned order passed by the High Court of Andhra Pradesh at Amaravati. The Special Leave Petition is, accordingly, dismissed. Pending applications, if any, shall also stand disposed of.” The same reasoning was reiterated when the review petition was filed by the assessee, with the Court repeating, “We have carefully gone through the review petition and the connected papers. We find no merit in the review petition and the same is, accordingly, dismissed.” Background The matter concerns a registered works contractor operating under the GST regime, whose principal activity involved execution of EPC works as a subcontractor. For the period July 2017 to March 2018, the assessee raised nine invoices amounting to ₹20.92 crore, inclusive of GST of ₹3,19,12,234, in March 2018. Despite issuing the invoices, the assessee did not file GSTR-3B monthly returns within the statutory deadlines, claiming inability to pay GST due to delayed payments from its main client. The assessee argued that even the partial receipts from the client were insufficient to meet tax liabilities and execute the project simultaneously. On 31 July 2018, officials of the Directorate General of GST Intelligence (DGGI) conducted an inspection, seized records, and recorded statements. Following the inspection, the assessee deposited the outstanding tax in instalments between 31 July 2018 and 29 September 2018 and filed all pending returns for FY 2017-18. However, GST authorities subsequently issued two show cause notices in August and September 2020 demanding interest and imposing penalty alleging wilful suppression. The adjudicating authority, through order dated 24 December 2021, confirmed the penalty under Section 74. The appellate authority upheld this finding, after which a recovery notice was issued demanding ₹3,20,72,233. The petitioner challenged the penalty primarily on three grounds. Firstly, section 74 could not be invoked since the entire tax amount had already been paid nearly two years before issuance of the show-cause notice, leaving no basis for alleging fraud or suppression. Secondly, non-payment arose purely due to financial difficulties, not intention to evade tax. Thirdly, the time limit for filing annual returns under Section 44 extended up to 7 February 2020, and therefore the tax authorities could not initiate action earlier based on non-filing of monthly returns. The Court held that Sections 37–39 of the CGST Act mandate monthly returns, and failure to file them amounts to suppression under Explanation-2 to Section 74. The Court observed that under Section 74(5), immunity from notice arises only when tax, interest, and 15% penalty are paid before issue of notice. In this case tax was paid prior to notice, but interest was paid later, and 15% penalty was never paid. Therefore, the conditions to bar issuance of notice were not satisfied. The Court noted that the assessee had received partial payments and yet chose not to remit GST or file returns, indicating deliberate non-compliance. “In such a situation it is difficult to accept the contention… that there was no wilful intention to suppress facts or the turnover of the petitioner and the requirement to pay tax.” Case Details Case Title: M/S Sriba Nirman Company Versus The Commissioner (Appeals), Guntur, Central Tax And Customs & Ors. Case No.: Diary No.38833/2025 Date: 18/11/2025 Click Here To Read Order Read More: Risk of AI ‘Hallucinating’ Fake Judgments: Delhi HC Directs GST & IT Dept. to Exercise Caution, Verify Case Laws Before Issuing SCNs

Supreme Court Upholds 100% GST Penalty for Wilful Suppression of Facts Over Non-Filing of Monthly Returns

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