GST UPDATE

Hon’ble Court: ALLAHABAD HIGH COURT
Case Title: Samsung Display Noida Private Limited vs Union Of India And 2 Others
Petition No. & Citation: WRIT TAX No. - 3609 of 2026

Hon’ble Judge(s)	HON'BLE SAUMITRA DAYAL SINGH, J. and HON'BLE SWARUPAMA CHATURVEDI, J.
Date of Order	September 2, 2026
Outcome	Proceedings stayed till date of next hearing

Brief Facts of the Case

Samsung Display Noida Private Limited filed its GST returns and claimed Input Tax Credit (ITC) on Plant and Machinery. The petitioner maintained that it had correctly disclosed the relevant figures in its returns and had not suppressed or misstated any material facts. The Revenue, however, sought to invoke the extended period of limitation under Section 74 of the U.P. GST Act, 2017, alleging fraud, suppression of material facts or misstatement in relation to the ITC claimed by the petitioner. During investigation, certain contract documents were discovered, which were relied upon by the Revenue in connection with the proceedings. Issue before the the Allahabad High Court considered the issue as to whether the Revenue had any material basis to allege that the petitioner had committed fraud, suppression of material facts or misstatement of facts for availing higher Input Tax Credit (ITC).

Brief Arguments by Petitioner

The petitioner contended that it had correctly disclosed the figures in its returns and that merely because it understood the law differently and claimed ITC on Plant and Machinery, it could not be alleged that there was suppression or misstatement of facts.

Brief Arguments by Respondent

The Revenue seeked time to file counter affidavit.

Cases Relied Upon

Case Law	Citation
The Commissioner, Central Excise and Customs and another Vs. M/s Reliance Industries Ltd.,	2023 INSC 591.

Findings and Judgement

The Court observed that the contract documents discovered during investigation could not, by themselves, be relied upon to set up a case under Section 74 of the U.P. GST Act, 2017, particularly when those documents formed the basis of the disclosures made by the petitioner and the Revenue did not contend that any fact discovered from those documents established the existence of the alleged higher ITC.

The Court observed that what could have been done in assessment or proceedings under Section 73 could not be attempted by invoking the extended period of limitation under Section 74. The submissions of the petitioner, to that extent, were found to have prima facie support from the decision of the Supreme Court in The Commissioner, Central Excise and Customs & Anr. v. M/s Reliance Industries Ltd., 2023 INSC 591.

Author’s Comment

The present judgment assumes significance, particularly in view of the decisions of the Hon’ble Supreme Court in G.R. Infra Projects Limited Ratlam (Civil Appeal No.11277 of 2026 ) and M/s Tata Steel Limited (Arising out of SLP (C) No.16859 of 2026), as it reiterates that the extended period can not be invoked mechanically. The proper officer should first acquire jurisdiction before invoking the extended period under Section 74. The expression “acquiring jurisdiction” in this context does not relate to whether an officer is designated as the “proper officer” or not. It means that the proper officer must independently satisfy himself, on the basis of the material available on record, that the case involves fraud, wilful misstatement or suppression of facts so as to justify invocation of the extended period. Such independent satisfaction is the foundation for assuming jurisdiction under Section 74.
This also means that the jurisdiction cannot be acquired merely by reproducing the allegations or information received from another authority. The proper officer is required to independently examine the material and apply his mind to determine whether the material actually establishes the ingredients necessary for invoking Section 74 in the case of the particular assessee. Thus, there cannot be any “borrowed satisfaction” for assuming jurisdiction under the extended period.
This raises the important question as to what should be the level of satisfaction required at the stage of invoking Section 74. The satisfaction must certainly be more than a mere suspicion, although it need not amount to conclusive proof at the stage of issuance of the show cause notice. However, the basis for such satisfaction must be evident from the show cause notice itself. The notice must disclose the specific allegations, the reasons for invoking the extended period, the material or evidence relied upon, and how such material establishes fraud, wilful misstatement or suppression of facts on the part of the assessee. There must also be a clear connection between the material relied upon and the conduct of the particular assessee against whom the extended period is being invoked.
One more important aspect is that the basis of such satisfaction must be reflected in the show cause notice itself. A mere reproduction of the words “fraud”, “wilful misstatement” or “suppression of facts”, without setting out the supporting allegations, material and justification, cannot by itself confer jurisdiction to invoke the extended period.
In the present case, the Allahabad High Court found prima facie merit in the petitioner’s submissions and stayed further proceedings pursuant to the show cause notice. The order thus serves as an important reminder that Section 74 cannot be invoked as a routine or mechanical provision. Before travelling beyond the normal period under Section 73, the Department must first establish, from the material and allegations contained in the show cause notice itself, the jurisdictional basis for invoking the extended period under Section 74. However, the stay has been granted by the Allahabad High Court for the revenue to file the Counter Affidavit. It is pertinent to note that Supreme Court in case of G.R. Infra Projects Limited Ratlam had specifically held thatDepartment cannot rely upon the Counter affidavit. Allegations must be clearly spelledout in the SCN itself. The Department cannot cure a defect or supply missing allegations in an SCN through a counter-affidavit filed subsequently before the Court. However, the matter is still pending consideration and the observations at this stage are prima facie in nature.

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GST update /2026-27/0079