2026-VIL-1258-RAJ
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SGST High Court Cases

GST - Intent to evade tax - Section 74(1) of CGST Act, 2017 - The SCN rested on the allegation that the Petitioner failed to disclose and pay the tax found during audit, which amounts to suppression with intent to evade, under the guise of public functions - Whether the notice discloses the jurisdictional fact of intent to evade tax, which alone opens the door to Section 74 - HELD - Sections 73 and 74 are mutually exclusive, and Section 74 is the harsher provision with a longer period, a penalty equal to the tax and the possibility of prosecution. The conditions must therefore be strictly met, and the Revenue cannot treat Section 74 as the default route. The words to evade tax govern each of fraud, wilful misstatement and suppression, since those are the means and evasion is the end, and both must exist together. Explanation 2 defines suppression but does not dispense with the requirement that it be to evade tax. Failure to pay is the starting point of both Sections 73 and 74, and if it by itself proved intent, Section 73 would have no field left. Intent is a state of mind found in those who direct the affairs of a body corporate - The Petitioner is a statutory authority run by public servants who would gain nothing from evading tax payable from public funds that would go into the public exchequer. The notice shows only a disagreement on law over whether the receipts are consideration for a supply. The receipts were found in the Petitioner's own books and records, the question admits of two plausible views, and the stand taken is arguable and openly taken. Raising a legal question in good faith is not a guise. Attributing intent to evade to officers of a State authority who gain nothing would also lead to prosecution under Section 132 of one officer by another, which the legislature could not have intended. A public authority is not barred from proceedings under Section 74 where the record shows deliberate falsification or a collateral purpose - The notice does not disclose the jurisdictional fact of intent to evade tax and the invocation of Section 74 is without jurisdiction. The SCN and all proceedings under it are quashed and the writ petition is allowed - GST - Misstatement and suppression alleged together - Section 74 and Explanation 2 of CGST Act, 2017 - Petitioner contended that the notice alleges both wilful misstatement and suppression, which cannot co-exist since misstatement is a positive act of giving wrong information and suppression is the withholding of information - Whether the notice is vitiated because it alleges both misstatement and suppression - HELD - The use of both expressions does not vitiate the notice, as the two often overlap and a misstatement may itself amount to suppression. Explanation 2 to Section 74 defines suppression as non-declaration of facts or information required to be declared in a return or document. A wrong declaration in a return is a misstatement and also amounts to non-declaration of the true facts, so both labels may fit the same conduct - GST - Writ petition against show cause notice - Petitioner is a statutory development authority against which an audit led to SCNs - Whether the Court should entertain a writ petition against a SCN when a statutory process of adjudication and appeal is available - HELD - A writ Court does not ordinarily interfere with a SCN, which is only the first step and records a tentative view. The rule is one of self restraint and not a bar on jurisdiction, as an alternative remedy is no bar where the proceedings are wholly without jurisdiction. Section 74 is a special power exercisable only on the existence of jurisdictional facts, namely fraud, wilful misstatement or suppression, coupled with intent to evade tax. If those facts cannot exist on the face of the notice, the officer assumes a jurisdiction the statute has not conferred, and the defect lies at the threshold. The prejudice is real, as a notice under Section 74 allows the Revenue to reach back for a longer period, carries a penalty equal to the tax and casts a charge of evasion. Such a challenge raises a pure question of law to be decided on the notice as it stands, without weighing evidence or deciding whether the three heads are taxable - The writ petition can be entertained.
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