Facts of the Case:

In this case, the petitioner challenged a show cause notice issued under Section 74 of the CGST/SGST Act, alleging fraud, wilful misstatement, and wilful suppression of facts to evade tax. The petitioner argued that the SCN was vague and wholly bereft of material particulars, containing only numerical figures without disclosing the factual foundation or specific acts constituting alleged fraud or suppression.

The petitioner approached the Madhya Pradesh High Court seeking quashing of the SCN on the ground of being deficient, non-speaking, and in violation of natural justice. The High Court, however, declined to exercise writ jurisdiction, holding that the petitioner must respond to the notice before departmental authorities.

Aggrieved, the petitioner filed Special Leave Petition (C) No. 33594/2025 before the Supreme Court.

Issue:

Whether a show cause notice issued under Section 74 of the GST Act, containing mere tax figures but no allegations, factual bases, or material particulars supporting the charge of fraud or suppression, is legally valid, or whether such deficiency renders it liable to be stayed or quashed.

Held that:

The Supreme Court found prima facie merit in the petitioner’s contention that the SCN was vague and devoid of foundational facts required under Section 74. The Court observed:

• The petitioner had “no idea” why the Department alleged fraud, wilful misstatement, or wilful suppression.
• The SCN contained nothing beyond figures, failing to disclose the basis for invoking the extended period of limitation or the stringent provisions of Section 74.
• A Section 74 notice must indicate specific reasons for alleging suppression, fraud, or misstatement; mere numerical discrepancies do not suffice.

Accordingly, the Supreme Court issued notice to the Revenue, returnable in four weeks. Directed stay of further proceedings arising out of the impugned SCN. Directed petitioner’s counsel to furnish papers to counsel usually appearing for the Revenue. The Court stopped short of deciding the validity of the SCN but clearly signaled that a non-speaking and cryptic SCN under Section 74 is prima facie unsustainable.

The Court reinforces that Section 74 is a serious provision invoking accusations of fraud/suppression, and thus the SCN must be speaking, reasoned, and fact-based. Affirms that vague SCNs lacking material particulars violate principles of natural justice.

Case Name: GR Infra Projects Limited Ratlam Versus State Of Madhya Pradesh & Ors. dated 21.11.2025

To read the complete judgement 2025 Taxo.online 3112