2026-VIL-87-SC
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SGST Supreme Court Cases

GST - Show Cause Notice under Section 74 of CGST Act, 2017 - Requirement of Fraud or Willful Misrepresentation or Suppression - Foundational Facts for Invoking Extended Period - Department sought to invoke extended period of five years under Section 74 by alleging fraud, willful misstatement or suppression of facts - Appellant contended that there was no allegation of fraud, willful misstatement or suppression of facts and SCN was issued as protective measure after Assessing Officer kept matter under call book pending disposal of audit objection before Public Accounts Committee - Whether SCN can be sustained under extended period of Section 74 without establishing foundational facts constituting fraud, willful misrepresentation or suppression - HELD – The proceedings under Section 73 and 74 can be initiated only on satisfaction of Assessing Officer. For notice under Section 74, satisfaction of Assessing Officer should be not only that mismatch of input tax credit and short payment of tax has occurred but also that fraud or willful misrepresentation or suppression had led to such mismatch or short payment. Mere employment of words indicating fraud, willful misrepresentation or suppression in notice without establishing foundational facts would not suffice - Foundational facts which led to inference of fraud, willful misrepresentation or suppression should be evident from notice itself. It is not mere lip service to provisions when extended limitation period is provided for recovery of excess benefit availed, short payment or excess refund - In present case, SCN did not contain any foundational facts to validate allegation of suppression except for bland statement of availing ITC without documentary evidence and suppression of facts. Mere statement that proceedings were initiated prior to expiry of limitation under Section 73 would not justify invocation of extended period under Section 74 - The fact that Department took up audit objections with Public Accounts Committee itself indicates absence of satisfaction on part of Department as to mismatch or short fall of payment of tax – Further, the annual returns for financial years 2018-2019 to 2020-2021 were required to be filed respectively on 31.12.2020, 31.03.2021 and 28.02.2022. Due to COVID-19 pandemic, limitation period was extended by excluding period between 15.03.2020 to 28.02.2022. Accordingly, limitation expired on 28.02.2025 for all three financial years and SCN issued on 13.06.2025 was past extended limitation period under Section 73 – The SCN and consequential Order-in-Original are set aside. However, extended period of two years from expiration of normal limitation period is not yet over. The Department may, if thought fit, initiate appropriate proceeding under Section 74 with foundational facts coming out from notice itself and order being passed before 28.02.2027 - The appeal stands allowed
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