The Hon’ble Allahabad High Court in the case of Bharat Mint & Allied Chemicals v. State of U.P. & Anr. [Writ Tax No. 2527 of 2025 dated May 30, 2025] held that where the proceedings were initially instated under Section 73 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) and subsequently a Show Cause Notice (“SCN”) arising out of the earlier SCN was issued under Section 74 of the CGST Act by the same officer without alleging fraud, suppression or wilful misstatement, then such an action is without jurisdiction. The Hon’ble Court quashed the subsequent SCN issued under Section 74 while allowing liberty to initiate fresh proceedings in accordance with law.
Facts:
Bharat Mint & Allied Chemicals (“the Petitioner”) was issued a SCN dated February 25, 2025 under Section 74 of the CGST/UPGST Act, by the State GST Authorities (“the Respondent”).
Prior to this, the Petitioner had received a SCN issued under Section 73 on February 20,2025. It covered ten issues, to which the Petitioner also submitted a detailed reply. However, with respect to Point Nos. 1, 6, 8, and 10, it was stated that further investigation was needed and a fresh SCN would be issued.
Subsequently, a fresh SCN was issued under Section 74 of the CGST/UPGST Act by the same officer. Aggrieved by the same, the Petitioner filed the present writ petition challenging the jurisdiction and validity of the SCN issued under Section 74.
Issue:
Whether issuance of SCN under Section 74, after adjudicating a prior SCN under Section 73 by the same officer and without any allegation of fraud, wilful suppression or misstatement, is valid under the GST law?
Held:
The Hon’ble Allahabad High Court in Writ Tax No. 2527 of 2025 held as under:
- Observed that, the Petitioner had earlier replied to the SCN issued under Section 73, and the order passed under Section 73(9) recorded that certain issues needed further investigation, leading to issuance of a fresh SCN under Section 74.
- Noted that, the SCN issued under Section 74 did not contain any allegations of fraud, wilful misstatement, or suppression of material facts, which are the essential preconditions for invoking Section 74.
- Held that, the situation was identical to the facts in M/s Vadilal Enterprises Ltd. v. State of U.P. & Ors. [Writ Tax No. 2486 of 2025 dated May 23, 2025], where the same officer had adopted a similar course of action, and thus the SCN issued under Section 74 was quashed, holding the same to be without jurisdiction.
- Further directed that, the Respondent is free to initiate fresh or appropriate proceedings in accordance with law.
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