đźš« SCN Under Section 74 Quashed: No Allegation of Fraud or Suppression

By Author | June 30, 2025
Allahabad HC | GST Judgements

đź“„ Case Summary

In Bharat Mint & Allied Chemicals v. State of U.P. & Anr. [Writ Tax No. 2527 of 2025, dated May 30, 2025], the Hon’ble Allahabad High Court held that an SCN under Section 74 of the CGST Act is invalid if it does not allege fraud, wilful misstatement, or suppression of facts.

The Court quashed the Section 74 notice and granted liberty to initiate fresh proceedings, if appropriate, in line with legal provisions.

⚖️ Background of the Case

  • The Petitioner, Bharat Mint & Allied Chemicals, received a Show Cause Notice (SCN) under Section 73 on February 20, 2025.
  • This notice addressed ten issues. The Petitioner replied to all, and for Points 1, 6, 8, and 10, the authorities stated that further investigation was needed.
  • Later, the same officer issued a new SCN under Section 74 on February 25, 2025, without mentioning any fraud, misstatement, or suppression.
  • The Petitioner challenged this second SCN through a writ petition.

âť“ Key Legal Issue

Can a fresh SCN under Section 74 be issued by the same officer—following a Section 73 adjudication—without alleging fraud or suppression?

🏛️ Court’s Observations and Judgment

  • The Court observed that the Petitioner had already replied to the earlier Section 73 SCN.
  • The order under Section 73(9) mentioned pending issues but didn’t include allegations necessary for Section 74 applicability.
  • The Court referred to Vadilal Enterprises Ltd. v. State of U.P. & Ors. [Writ Tax No. 2486 of 2025] with similar facts, where the SCN under Section 74 was also quashed.

âś… Final Verdict

  • The Allahabad High Court quashed the Section 74 SCN as being without jurisdiction.
  • However, it allowed the GST authorities to initiate fresh proceedings, if required, in accordance with the law.

đź”– Conclusion

The ruling reinforces that fraud, wilful misstatement, or suppression must be clearly invoked to justify action under Section 74. Without these elements, such notices are ultra vires.

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