Case Law Details
GR Infra Projects Limited Ratlam Vs State of Madhya Pradesh & Ors. (Supreme Court of India)
The case concerns a challenge to a GST show cause notice (SCN) issued under Section 74 of the Central Goods and Services Tax Act, 2017, read with the Madhya Pradesh Goods and Services Tax Act. The petitioner, a company engaged in road and highway construction and registered under CGST and MPGST, approached the Madhya Pradesh High Court seeking quashing of the SCN dated 13.06.2025 or, alternatively, a direction to adjudicate its preliminary objections through a reasoned order.
Read HC Judgment: Writ Petition Against GST Notice Dismissed for Bypassing Appeal Mechanism
Earlier, the petitioner had faced a GST investigation beginning with summons issued to its authorised signatory under Section 70. In August 2022, its premises were searched under Section 67, during which documents were seized. The petitioner claims to have cooperated throughout. Subsequently, an intimation under Rule 142(1A) in Form DRC-01A dated 29.04.2025 was issued, to which the petitioner filed a detailed response on 14.05.2025, along with preliminary objections. The petitioner was not initially supplied the draft notice dated 03.03.2025 on which the DRC-01A was based. This draft was later shared on 27.05.2025, prompting further objections from the petitioner.
The SCN issued on 13.06.2025 demanded tax of ₹1,52,56,431/-, covering alleged discrepancies involving outward supplies, inward supplies, ineligible ITC for site offices, and post-supply cancellation of vendors. The petitioner challenged the SCN on the ground that the allegations of fraud and wilful evasion were vague. It contended that the tax period concerned (2018-19) was time-barred for action under Section 73 (three-year limitation), and that no material demonstrating fraud or wilful misstatement existed to justify the extended five-year limitation under Section 74. The petitioner relied on judgments including Uniworth Textiles Ltd. (Supreme Court), which held that the burden of proof of mala fide conduct lies on Revenue and requires clear averments in the SCN, and two Division Bench judgments of the Allahabad High Court where similar SCNs were quashed for absence of any allegations of fraud or suppression.
The State opposed the writ petition, asserting that the petitioner had already responded to the SCN and had adequate remedies under Section 107 for appeal. It argued that all issues could be raised before the adjudicating authority and that writ jurisdiction should not be invoked at this stage.
The High Court observed that the petitioner had not filed copies of the SCNs relied on from the Allahabad High Court decisions to enable comparison. More importantly, it found that the SCN in the present matter specifically contained allegations of fraud and wilful suppression, unlike in those cases. The Court noted that the 191-page draft notice dated 03.03.2025 prepared by the Deputy Commissioner following the Section 67 search included material alleging wilful evasion of GST for the relevant year. The framework of the GST Act allows issuance of notices under either Section 73 or 74 after such inquiry. The difference lies only in the limitation period—three years for Section 73 and five years for Section 74. At this preliminary stage, the Court held that it could not examine whether the proper officer had erroneously invoked Section 74. The statute itself contemplates that even after issuing a notice under Section 74, the proper officer may ultimately pass an order under Section 73 if fraud/suppression is not established.
On the petitioner’s argument that participation in proceedings could render the case time-barred under Section 73, the High Court stated that such issues should be decided by the proper authority based on the material. The Court relied on the Supreme Court’s decision in State of Maharashtra v. Greatship (India) Ltd., which held that when adequate statutory remedies exist, High Courts should refrain from exercising writ jurisdiction. Applying this principle, the High Court held that the petitioner should avail the statutory remedy rather than invoke writ jurisdiction at the SCN stage.
Accordingly, the High Court dismissed the writ petition and directed the proper officer to decide the matter uninfluenced by the observations in the order.
The petitioner thereafter approached the Supreme Court. Before the Supreme Court, the main contention advanced was that the SCN issued under Section 74 was completely bereft of material particulars. The petitioner argued that it was unaware of the basis on which the Department alleged fraud, wilful misstatement, or wilful suppression to evade tax, and that except for figures, the notice contained nothing substantive. The SCN had already been challenged before the High Court, but the High Court declined to entertain the writ petition.
The Supreme Court observed prima facie that the petitioner appeared justified in arguing that the SCN lacked material particulars. It noted that except for numerical figures, the SCN did not specify material facts or grounds supporting allegations of fraud or suppression. In view of this, the Supreme Court issued notice returnable in four weeks, permitted dasti service, and stayed further proceedings under the impugned SCN during the pendency of the case. The Court also directed the petitioner’s counsel to provide a full set of papers to counsel for the Revenue.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Exemption Applications are allowed.
2. The principal argument of the learned counsel appearing for the petitioner (Assessee) is that the show cause notice issued by the Department invoking Section 74 of the GST Act is bereft of any material particulars.
3. The petitioner has no idea why the Department says that there has been fraud, willful misstatement on facts to evade tax and willful suppression of facts to evade tax.
4. The show cause notice was challenged before the High Court on the ground of being very deficient. However, the High Court declined to entertain the writ petition. Prima facie, the petitioner seems to 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.
5. Issue notice returnable after four weeks.
6. Dasti service, in addition, is permitted.
7. In the meantime, the further proceedings shall remain stayed.
8. The learned counsel appearing for the petitioner shall furnish one set of his entire paper book to Mr. V.C. Bharathi, the learned counsel who ordinarily appears for the Revenue Department.
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