GST Update / 2026-27/0074

Commissioner of Central ExM/s G.R. Infra Projects Limited Ratlam vs The State of Madhya Pradesh & Ors.cise & Service Tax, Bangalore Ors. v. M/s Northern Operating Systems Pvt. Ltd.

GST UPDATE

Hon’ble Court: SUPREME COURT OF INDIA
Case Title: M/s G.R. Infra Projects Limited Ratlam vs The State of Madhya Pradesh & Ors.
Appeal No. & Citation: Special Leave Petition (C) No.33594 of 2025

Hon’ble Judge(s)	JUSTICE J.B. PARDIWALA and JUSTICE K. VINOD CHANDRAN
Date of Order	19-08-2026
Outcome	In favour of the Appellant

Brief Facts of the Case

The present case concerns the validity of a Show Cause Notice (SCN) issued under Section 74 of the CGST Act, 2017 for the assessment year 2018-19. The SCN was issued on 13.06.2025. The assessee challenged the invocation of the extended period of limitation under Section 74 on the ground that the SCN merely used expressions such as “fraud orconcealment of facts” without setting out the specific facts or circumstances which constituted fraud, wilful misstatement or suppression of facts. The assessee contended that once the normal limitation period under Section 73 had expired, the Department could not validly invoke Section 74 merely by mechanically inserting the statutory expressions in the SCN.

Relevant Section

Section 74 of the CGST Act, 2017

Question before Hon’ble Court

Whether an SCN can validly invoke the extended period of limitation under Section 74 of the CGST Act merely by using the expressions “fraud”, “wilful misstatement” or “suppression of facts”, without setting out the specific allegations and circumstances establishing such conduct in the SCN itself?

Brief Arguments by Petitioner

The appellant contended that proceedings under Section 74 could be initiated only where fraud, wilful misstatement or suppression of facts was actually alleged and supported by facts in the SCN itself. According to the appellant, the SCN was issued beyond the normal limitation period prescribed under Section 73 and, was issued under Section 74 only to take advantage of the extended timelines under Section 74 as the time limit to issue notice under Section 73 had expired. Therefore, the Department was required to specifically establish why the case fell within Section 74.
It was further held that, even after considering the extended timelines due to occurrence of Covid, the last date to issue SCN under Section 73 was 28.02.2025. Since the SCN was issued on 13.06.2025, it was beyond the limitation prescribed under Section 73, making the question of whether Section 74 could be invoked particularly significant.
It was further submitted that the Department could not cure the defects in the SCN by subsequently explaining the allegations in its counter-affidavit before the Court. The validity of the SCN had to be tested on the basis of the contents of the Notice itself.

Brief Arguments by Respondent

The Department sought to justify the invocation of Section 74 by relying upon the allegations elaborated in its counter-affidavit.

Findings and Judgement

Validity of the SCN Must Be Examined from the SCN Itself

The Supreme Court first dealt with the Department's attempt to rely upon the counter-affidavit filed before the Court to explain and supplement the allegations contained in the SCN. The Department cannot cure a defect or supply missing allegations in an SCN through a counter-affidavit filed subsequently before the Court.
Normal Limitation Under Section 73
The Court thereafter examined the statutory limitation under Section 73 and held that even after giving the corresponding Covid – 19 extension, the limitation under Section 73 was held to expire on 28.02.2025. Therefore, the SCN dated 13.06.2025 was clearly beyond the limitation prescribed under Section 73. The Court held that Department can not invoke extended period only because the limitation under Section 73 has expired.

Mere Use of the Words “Fraud or Concealment of Facts” Is Not Sufficient

On examining the SCN, the Supreme Court found that, except for a general statement alleging “fraud or concealment of facts”, the notice did not explain how fraud was inferred or how concealment of facts had been detected. The Court emphasised it is necessary to disclose allegations and facts which lead to the inference of fraud, wilful misstatement or suppression of facts. And such allegation must therefore emanate from the SCN itself.

Mechanical Reproduction of Statutory Language Is Impermissible

The Department is required to list out the relevant aspects and circumstances which justify the conclusion that the assessee had resorted to one or more of these acts. Thus, there must be a clear factual foundation in the SCN for invoking the extended period of limitation.

SCN was itself ambiguous

The Court also drew attention to the use of the expression “fraud or concealment of facts” in the SCN. According to the Court, the use of “or” itself indicated that even the assessing officer was not clear whether the proceedings were based upon fraud or concealment of facts. This demonstrated that the SCN lacked the necessary clarity regarding the precise basis on which Section 74 was being invoked.

Subsequent Material Before the Court Cannot Cure the Defective SCN

The Department had referred to various proceedings undertaken during the investigation, including summons, inspection, recording of statements and several opportunities allegedly not availed by the assessee. However, these aspects were essentially relied upon through the counter-affidavit. The Supreme Court did not permit these subsequent explanations to cure the deficiencies in the SCN. The principle is that the validity of the notice must be assessed on the basis of the notice as issued, and not by reconstructing or improving the Department's case subsequently before the Court.
Accordingly, the Court set aside the High Court's order as well as the SCN.

CA Pradeep Jain_

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GST Update / 2026-27/0074

GST UPDATE

Brief Facts of the Case

Relevant Section

Question before Hon’ble Court

Brief Arguments by Petitioner

Brief Arguments by Respondent

Findings and Judgement

CA Pradeep Jain_

Opinion

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