A GST show-cause notice cannot invoke the extended limitation period under Section 74 of the Central Goods and Services Tax Act merely by making a “bland statement” alleging fraud or concealment of facts, the Supreme Court has held.

The Court said that a notice seeking to invoke the extended limitation period must itself spell out the specific allegations and circumstances that led the assessing officer to infer fraud, wilful misstatement or suppression of facts.

A Bench of Justice JB Pardiwala and Justice K. Vinod Chandran made the observation while allowing an appeal filed by G.R. Infra Projects Limited, Ratlam, against the State of Madhya Pradesh.

The Supreme Court set aside the show-cause notice issued to the company for the 2018-19 assessment year, as well as the Madhya Pradesh High Court order that had upheld it.

'Bland statement' of fraud not enough

The Court was particularly critical of the language used in the disputed notice.

“A bare reading of the notice” showed that, apart from a general statement of “fraud or concealment of facts”, there was nothing explaining how fraud had been inferred or how concealment of facts had been detected, the Bench observed.

The Court also drew attention to the use of the word “or”, saying it indicated that even the assessing officer appeared uncertain whether the proceedings were based on fraud or concealment of facts.

"A bare reading of the notice would indicate that but for a bland statement of 'fraud or concealment of facts' nothing is stated as to how fraud was inferred or concealment of facts were detected. In fact, the 'or' employed indicates that even the assessing o5cer was not sure that the assessment was proceeded by reason of fraud or on the ground of concealment of facts. What is required for the extended time to be applied are the allegations, which lead to the inference of a fraud or the concealment as attempted by the assessee resulting in suppression of facts, should emanate from the notice itself. It cannot be a mechanical use of the words 'fraud, willful misstatement or suppression of facts' without listing out the aspects which persuades the assessing o5cer to conclude that there has been employed either of these surreptitious devices by the assessee," the Court observed.

State cannot supplement defective notice through counter-affidavit

The Court also rejected an attempt by the State to rely on allegations elaborated in its counter-affidavit before the Court.

The Supreme Court reiterated that when an authority issues a notice or order, the requirements necessary to sustain that notice or order must be contained in the document itself. They cannot subsequently be supplied through a counter-affidavit in court.

"We refused to look at the counter-affidavit on the trite principle that when an authority has issued a notice or an order, the requirements to make the notice or order valid should be contained in such notice or order and cannot be supplanted by a counter afidavit in Court, where the notice or order is alleged to be invalid for reason to non-application of mind, the requirements having not met and so on and so forth."

Section 73 limitation had expired

The dispute arose from a show-cause notice dated June 13, 2025 concerning the 2018-19 assessment year.

The Court found that proceedings under Section 73, which covers tax short-paid or not paid for reasons other than fraud, wilful misstatement or suppression of facts, were already barred by limitation.

For 2018-19, the annual return filing deadline had ultimately been extended to December 31, 2020. Taking into account the limitation period and the exclusion granted by the Supreme Court during the COVID-19 pandemic, the Court calculated that the extended deadline for issuing a Section 73 notice expired on February 28, 2025.

The disputed notice was issued more than three months later. The State therefore sought to sustain the proceedings under Section 74.

The State's case referred to an investigation that had commenced with summons concerning the company's business for financial years 2017-18 to 2020-21.

An inspection was conducted at the company's premises and statements were recorded from its accountant, authorised signatory and director. The State also alleged that the company failed to appear on several scheduled hearings.

A draft notice-cum-investigation report was prepared on March 3, 2025, followed by an intimation under Section 142(1A). After the company raised objections and the draft notice was served, the final show-cause notice was issued under Section 74 on June 13, 2025.

But the Supreme Court held that whatever material the State relied upon during the investigation could not substitute for the absence of specific allegations in the final statutory notice.

Finding “absolutely no reason” to sustain the show-cause notice, the Bench set aside both the notice and the High Court's order. The Court directed the State to desist from taking any further proceedings pursuant to the notice challenged before the High Court.

Case : M/s G.R. Infra Projects Limited Ratlam v. State of Madhya Pradesh & Ors.,

Citation : 2026 LiveLaw (SC) 852

Click here to read the judgment