GST: Gujarat HC Protects Assessee from Section 74 Action Amid Dispute on Input Credit Distribution

The Gujarat High Court has intervened to protect an assessee from being subjected to punitive action under Section 74 of the CGST Act, in a dispute centered on distribution of input tax credit (ITC) among recipients. The Court held that mere disagreement over ITC allocation does not automatically warrant invocation of Section 74 (which deals with fraud or suppression) — at least in absence of clear evidence of malafide intent or suppression. The ruling clarifies that where the issue is one of dispute rather than fraud, tax authorities must not rush into penal action, safeguarding legitimate taxpayers from disproportionate coercive measures. This judgment is significant for businesses facing ITC-sharing or apportionment disputes, as it underscores threshold safeguards to prevent overreach by revenue authorities. (Taxscan)