GST SCN issued u/s 74 appears to be Bereft of Material Particulars: Supreme Court takes Contrary View to MP HC, Halts Proceedings [Read Order]

The Supreme Court has entertained a matter with regards to the issuance of Show Cause Notice ( SCN ) under Section 74 of the Goods and Services Tax ( GST ) Act without showing proper evidence of fraud or wilful misstatement or intention to evade tax. It took a different opinion from the view of the Madhya Pradesh High Court.

The bench of Justice J.B. Pardiwala and Justice K V Viswanathan has observed that “Prima facie, the petitioner seems to be justified in saying that the show cause notice is bereft of material particulars. Except figures, there is nothing else stated in the show cause notice.”

The Special leave petition was filed by the petitioner named G R Infra Projects Limited Ratlam challenging the notice issued under Section 74 of theGST Act.

The primary argument of the petitioner was that the show cause notice issued by the Department invoking Section 74 of the GST Act is bereft of any material particulars.

The apex bench noted that the petitioner has no idea on why the Department says that there has been fraud, willful misstatement on facts to evade tax and willful suppression of facts to evade tax.

The background of the matter is that, the petitioner initially approached the High Court of Madhya Pradesh challenging the same, however, the same was rejected. Before the high court, the petitioner argued that the allegations of fraud and willful evasion as they are very vague and no such details have been given in it.

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Therefore, such notice is unsustainable in law. The authorities could have issued the notice under Section 73 in absence of any material of fraud and willful evasion, for which the limitation is only 3 years, said the counsel for the petitioner.

On the contrary, the department’s counsel asserted before the high court that the writ petition is not maintainable. The petitioner has already filed a reply to the show cause notice. The petitioner is free to raise all these grounds before the proper officer, said the bench.

After passing the order in original, the petitioner shall have a remedy under Section 107 of the MPGST Act to file an appeal and thereafter further appeal to the GST Appellate Tribunal, added the department counsel.

The high court bench of Justice Vivek Rusia and Justice Binod Kumar Dwivedi, in its order said that, in the SCN, there are specific allegations of fraud and willful suppression of facts against the petitioner. Accordingly the petition was dismissed.

Following that, the petitioner filed an SLP, which was entertained by the high court and noted that the notice suffered from serious deficiencies.

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