Gr Infra Projects Limited Ratlam Through Its Authorized Signatory Mr. Pankaj Das vs. The State Of Madhya Pradesh

Held

The Court held that the show-cause notice dated August 25, 2026, issued under Section 74 of the CGST Act, 2017, is liable to be quashed. The Court found that while the notice alleged fraud, willful misstatement, and suppression of facts to evade tax, it failed to provide specific details substantiating these ingredients. The Court emphasized that merely mentioning Section 74 is insufficient; specific allegations and material must be disclosed in the notice itself to bring the case within its scope. The Court noted that the impugned notice was identical in its deficiency to a notice previously quashed by the Supreme Court in Civil Appeal No. 11277/2026, which held that bald statements of fraud or concealment are not enough and that the notice must detail the aspects that led the assessing officer to infer such conduct. Consequently, the Court quashed the show-cause notice and the proceedings initiated based on it. However, the Court clarified that it is open for the department to issue a fresh show-cause notice in accordance with law, particularly adhering to the requirements of Section 74.

Facts

The petitioner, GR Infra Projects Limited, filed a writ petition challenging a show-cause notice dated August 25, 2026, issued by the Joint Commissioner (ST) under Section 74 of the CGST Act, 2017. The petitioner contended that the notice was issued without disclosing specific details of fraud, willful misstatement, or suppression of facts, which are prerequisites for invoking Section 74. The petitioner highlighted that a similar show-cause notice for a different period was previously quashed by the Supreme Court. The revenue argued that the notice was issued after considering the petitioner's replies to pre-show-cause notices and was based on available material indicating willful suppression and misstatement.

Key Issues

1. Whether the show-cause notice dated August 25, 2026, issued under Section 74 of the CGST Act, 2017, is liable to be quashed for failing to disclose specific allegations of fraud, willful misstatement, or suppression of facts to evade tax, as required by the provision and as interpreted by the Supreme Court? Petitioner's Arguments: - Invoking Section 74 necessitates specific disclosure of fraud, willful misstatement, or suppression of facts in the show-cause notice. - The impugned notice lacks these essential elements and merely uses generic terms. - A Supreme Court judgment in a similar case (Civil Appeal No. 11277/2026) held that bald statements of fraud or concealment are insufficient and that specific aspects persuading the assessing officer must be detailed. - The present show-cause notice is identical in its deficiency to the one quashed by the Supreme Court. Revenue's Arguments: - The show-cause notice was issued after considering the petitioner's responses to pre-show-cause notices (DRC-01A). - The authority had material indicating willful suppression of facts and misstatement to evade tax, justifying the issuance of the notice under Section 74. - No illegality was committed as the notice is based on available departmental material.