Madras High Court Quashes GST Order for Wrongful Use of Section 74 Instead of Section 74A

The Madras High Court in Baskar Selvakumar Vs Assistant Commissioner of CGST and Central Excise examined the validity of a GST assessment order for the financial year 2024–25, where the authorities had invoked Section 74 even though that provision, along with Section 73, had been omitted with effect from 01.04.2024. The Court held that for periods from FY 2024–25 onwards, only Section 74A of the GST Act is applicable, and any proceedings under Section 73 or Section 74 for such years would be without jurisdiction.

Background of the Dispute

Writ Petition and Impugned Order

  • The assessee challenged an order dated 24.11.2025 passed by the GST authority in relation to financial year 2024–25.
  • The assessee approached the High Court under writ jurisdiction seeking to quash this order on the ground of lack of jurisdiction and violation of proper statutory procedure.

Core Contention of the Assessee

The assessee’s counsel argued that:

  • Section 73 and Section 74 of the GST Act had been omitted with effect from 01.04.2024.
  • From that date onwards, for financial years commencing on or after 01.04.2024 (including FY 2024–25), proceedings relating to tax short payment, non‑payment, erroneous refund, etc., must be initiated only under Section 74A.
  • Despite this legal position, the authorities had:
    • Issued a show cause notice under Section 74, and
    • Passed an assessment order under the same provision.

Therefore, the assessee contended that the entire proceedings were void and without jurisdiction, as the authority relied upon a statutory provision which was no longer applicable for the relevant financial year.

Stand of the GST Department

Fair Admission of Error by Revenue

The learned Additional Government Pleader, appearing for the GST authorities, did not dispute the legal position. Instead, he:

  • Conceded that the initiation of proceedings under Section 74 for FY 2024–25 was an error.
  • Accepted that the correct provision to be invoked was Section 74A.
  • Requested the Court to:
    • Set aside the impugned order, and
    • Remand the matter back to the original authority for fresh proceedings under the correct statutory provision.

This candid admission played an important role in how the Court chose to resolve the matter, particularly in shaping the remedial directions.

Court’s Analysis and Reasoning

Applicability of Sections 73, 74, and 74A

The High Court, after hearing both sides and examining the materials on record, recorded a clear finding that:

  • Section 73 and Section 74 of the GST Act stood omitted with effect from 01.04.2024.
  • For financial years beginning on or after 01.04.2024, only Section 74A could be invoked for initiation of adjudication proceedings.