2026-VIL-111-GSTAT-KOL
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SGST Tribunal

GST – Demand for tax under Section 74 for alleged suppression of outward supplies – Revenue conducted search and inspection at registered office of taxpayer - Adjudicating authority issued demand order in Form GST-DRC-07 determining tax liability for suppression of outward supply without serving any statutory show cause notice on taxpayer – Whether proceedings for recovery of tax under Section 74 of CGST Act, 2017 can be sustained when no statutory show cause notice has been issued to taxpayer – HELD - Section 74(1) of CGST Act mandates that proper officer shall serve notice on the person chargeable with tax, which has not been paid or short paid or for wrongful availing of input tax credit by reason of fraud or wilful misstatement or suppression of facts - GST-DRC-01 and GST-DRC-02 forms cannot substitute statutory notice contemplated under Sections 73 and 74. A show cause notice is the starting point of legal proceeding and a mandatory requirement according to principles of natural justice. Even when SCN is issued, it should contain foundational facts to enable taxpayer to make effective representation. No other communication or order can be construed as statutory show cause notice - As per judgment of Supreme Court in M/S Tata Steel Limited case, foundational facts which led to inference of fraud, willful misrepresentation or suppression should be evident from the notice itself. In this case, no notice at all has been issued even though tax was determined under Section 74 - The demand created under Section 74 cannot survive without a statutory notice – The impugned order set aside and the appeal is allowed
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