S.S. Infrazone Pvt. Ltd. Lko Vs State of U.P (Allahabad High Court)
Summary: The Allahabad High Court, Lucknow Bench, considered a writ petition filed by M/S S.S. Infrazone Pvt. Ltd. Lko. challenging a show cause notice dated 30 April 2026 issued under Section 74 of the SGST/CGST Act, 2017 for the tax period 2020-21. The petitioner invoked the writ jurisdiction of the Court under Article 226 of the Constitution of India and sought a writ of certiorari quashing the notice on the ground that it suffered from patent lack of jurisdiction and was otherwise without jurisdiction.
The petitioner’s principal challenge was directed at the invocation of Section 74. On examination of the impugned show cause notice, the Court found that it did not contain the ingredients required under Section 74 in relation to fraud, wilful misstatement or suppression of material facts with the intent to evade tax. The Court therefore treated the absence of these ingredients in the notice as material to the jurisdiction to proceed under Section 74. Section 74 concerns determination of tax not paid or short paid, erroneously refunded, or input tax credit wrongly availed or utilised by reason of fraud, wilful misstatement or suppression of facts. A TaxGuru publication reproducing and explaining Section 74 is available.
Learned counsel for the petitioner relied upon the judgment of a Coordinate Bench of the Allahabad High Court in HCL Infotech Ltd. Vs Commissioner, Commercial Tax and Another, Writ Tax No. 1396 of 2024, reported in 2024:AHC:158274-DB. In that decision, the Allahabad High Court had dealt with a challenge to a Section 74 show cause notice where the foundational ingredients for invoking that provision were absent.
Upon perusal of the show cause notice, the Court stated that it was in consensus ad idem with the submissions advanced by the petitioner’s counsel because the notice did not spell out the ingredients required under Section 74 of the SGST/CGST Act, 2017.
Accordingly, the Court quashed and set aside the impugned show cause notice. Importantly, the relief was accompanied by liberty to the respondent authorities to issue a fresh show cause notice in accordance with law. Thus, the Court did not prohibit the authorities from issuing a fresh notice; the operative relief was the setting aside of the particular notice dated 30 April 2026, with liberty to proceed afresh in accordance with law.
The writ petition was consequently disposed of by the Allahabad High Court on 7 August 2026.
Cases Discussed
- HCL Infotech Ltd. Vs Commissioner, Commercial Tax and Another, Writ Tax No. 1396 of 2024, 2024:AHC:158274-DB — relied upon by the petitioner in support of the challenge to the Section 74 show cause notice.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard learned counsel appearing on behalf of the petitioner and Sri Sanjay Sarin, learned Additional Chief Standing Counsel appearing on behalf of the State.
2. This is a writ petition under Article 226 of the Constitution of India, wherein the writ petitioner has made the following main prayer:-
“A- Issue a writ, order or direction in the nature of certiorari quashing the impugned show cause notice dated 30.04.2026 (Annexure-1) issued by respondent no. 2 under Section 74 of the SGST/CGST Act, 2017 for the tax period 2020-21, as the same suffers from patent lack of jurisdiction and is also otherwise without jurisdiction.”
3. Upon perusal of the show cause notice, we find that the show cause notice issued under Section 74 of the SGST/CGST Act, 2017, does not contain the ingredients required under Section 74 of the SGST/CGST Act, 2017 in relation to any fraud, wilful misstatement or suppression of material facts with the intent to evade tax.
4. Learned counsel appearing on behalf of the petitioner has placed reliance upon a judgment of a Coordinate Bench of this Court in Writ Tax No.1396 of 2024 in re: HCL Infotech Ltd. vs. Commissioner, Commercial Tax and another, reported in 2024:AHC:158274-DB.
5. Upon perusal of the said show cause notice, we are at consensus ad idem with the submissions advanced by learned counsel appearing on behalf of the petitioner as the show cause notice does not spell out the ingredients required under Section 74 of the SGST/CGST Act, 2017.
6. Accordingly, the impugned show cause notice is quashed and set aside with liberty granted to the respondent-authorities to issue a fresh show cause notice, in accordance with law.
7. With the above directions, the writ petition is disposed of.
