An Indore-based textile exporter received a GST Show Cause Notice under Section 74 (fraud) for ₹2.8 crore — alleging wrongful ITC claims on inputs from suppliers later found to be fake invoice generators. The exporter had genuinely purchased goods, but the supplier's GST registration had been canceled retrospectively. The department was demanding 100% penalty + interest + prosecution threat.

1. CA Harshaditya Kabra personally reviewed all purchase invoices, e-way bills, payment records, and lorry receipts to establish genuine transaction records.
2. We filed a detailed reply demonstrating that the taxpayer had exercised due diligence (checked GSTIN validity, had e-way bills, payments via banking channels).
3. We cited the Supreme Court decision in State of Karnataka v. M/S Ecom Gill Coffee Trading (2023) on buyer protection for genuine transactions.
4. We demonstrated that the exporter had no knowledge of supplier fraud and had not colluded — converting the matter from fraud (Section 74) to mistake (Section 73).
5. We also filed for export refunds that were being held, demonstrating the exporter was a net tax contributor (not evader).

The GST Appellate Authority accepted our arguments and reclassified the matter under Section 73. Penalty reduced from ₹2.8 crore (100%) to ₹28 lakh (10%). Interest was partially waived. Export refunds of ₹42 lakh were also released. Total savings for the client: approximately ₹3.5 crore including refunds. Matter resolved in 8 months.