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Court Room Series — G.R. Infra Projects Limited
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M/s G.R. Infra Projects Limited, Ratlam v. State of Madhya Pradesh & Ors.

Court:

Supreme Court of India

Bench: Justice J.B. Pardiwala and Justice K. Vinod Chandran

Civil Appeal No.: 11277 of 2026

Arising out of: SLP (C) No. 33594 of 2025

Date of Order: 19 August 2026

Facts of the Case:

M/s G.R. Infra Projects Limited was subjected to a Show Cause Notice dated 13 June 2025 in respect of AY 2018–19. The Department sought to invoke Section 74 of the CGST Act, which permits the extended period of limitation where tax has not been paid or has been short-paid by reason of fraud, wilful misstatement or suppression of facts.

The assessee challenged the SCN, contending that the normal limitation under Section 73 had already expired and that the SCN did not contain any specific factual allegations establishing fraud, wilful misstatement or suppression of facts.

The Department sought to support the invocation of Section 74 by relying, inter alia, upon material and allegations elaborated in its counter-affidavit before the Court.

The Supreme Court declined to examine the counter-affidavit for the purpose of curing deficiencies in the SCN.

Issues:                                      

The principal issues before the Supreme Court were:

  1. Whether the SCN dated 13 June 2025 was within the normal limitation prescribed under Section 73 of the CGST Act?
  2. If the Section 73 limitation had expired, could the Department invoke Section 74 merely by referring to “fraud” or “concealment of facts”?
  3. Whether the factual basis for alleging fraud, wilful misstatement or suppression of facts must be contained in the SCN itself?
  4. Whether deficiencies in the SCN could subsequently be cured or supplemented through a counter-affidavit filed before the Court?

Arguments of the Appellant

The assessee contended that:

  • Section 74 is attracted only when the statutory ingredients of fraud, wilful misstatement or suppression of facts are actually present.
  • These ingredients cannot be invoked merely by reproducing the language of the statute.
  • The SCN itself must disclose the facts and circumstances which led the Department to form the conclusion that fraud, wilful misstatement or suppression had occurred.
  • The normal limitation under Section 73 had already expired.
  • Even after taking into account the exclusion of the limitation period during the COVID-19 pandemic, the Section 73 limitation expired on 28 February 2025.
  • The SCN dated 13 June 2025 was therefore beyond the Section 73 limitation period.
  • The Department could not overcome this limitation merely by mechanically invoking Section 74.
  • A defective SCN could not subsequently be supplemented through a counter-affidavit or additional explanations placed before the Court.

The essence of the assessee's argument was that the jurisdiction to invoke the extended limitation must be apparent from the SCN itself.

Arguments of the Respondent

The Department sought to sustain the proceedings under Section 74 by relying upon the circumstances surrounding the investigation.

It sought to place reliance on material and allegations elaborated in its counter-affidavit, including the investigation undertaken by the Department and the circumstances which, according to the Department, justified the allegation of fraud or suppression.

The Department's position, in substance, was that the investigation and material available with it provided sufficient basis for invoking Section 74.

However, the Supreme Court held that such material could not be used to supplement a deficient SCN after the notice had been issued.

Analysis :

A. Limitation under Section 73 had expired

For AY 2018–19, the Court noted that the annual return filing period ultimately stood extended to 31 December 2020. The ordinary three-year limitation under Section 73 would therefore have expired on 31 December 2023.

The Supreme Court's COVID-related orders excluded the period from 15 March 2020 to 28 February 2022 for computation of limitation.

After giving effect to this exclusion, the Court concluded that the extended limitation under Section 73 expired on 28 February 2025.

Since the SCN was issued on 13 June 2025, it was beyond the Section 73 limitation period.

B. Section 74 cannot be used merely because Section 73 has become time-barred

The important principle emerging from the judgment is that the expiry of limitation under Section 73 does not, by itself, provide a reason to invoke Section 74.

Section 74 has its own statutory conditions.

The Department must establish the factual foundation for invoking the extended period on the basis of fraud, wilful misstatement or suppression of facts.

Therefore, Section 74 cannot become a mechanism to revive a proceeding that is otherwise barred under Section 73 merely by inserting the statutory expressions into the SCN.

C. The SCN must contain the factual foundation

The Supreme Court examined the SCN and found that, apart from a “bland statement” of “fraud or concealment of facts”, the notice did not explain how fraud was inferred or how concealment of facts was detected.

The Court held that the allegations leading to the inference of fraud or suppression must emanate from the SCN itself.

Thus, the SCN must disclose the relevant factual circumstances which justify the conclusion that the assessee had resorted to the conduct contemplated by Section 74.

D. Mechanical reproduction of statutory language is insufficient

The Court made it clear that merely reproducing expressions such as:

“fraud” / “wilful misstatement” / “suppression of facts”

does not automatically satisfy the statutory requirement.

The officer must identify the relevant circumstances and facts which led to the conclusion that one or more of these ingredients existed.

E. The ambiguity in the expression “fraud or concealment of facts”

The Court also attached significance to the use of the expression “fraud or concealment of facts.”

The use of “or”, in the circumstances of the SCN, indicated that the assessing officer itself had not clearly identified the precise basis for invoking the extended period.

This reinforced the Court's conclusion that the SCN lacked the necessary factual and legal clarity.

F. Counter-affidavit cannot cure a defective SCN

This is perhaps the most significant procedural aspect of the judgment.

The Department attempted to elaborate the allegations through its counter-affidavit before the Court.

The Supreme Court refused to consider that material for the purpose of curing the SCN.

Ratio Decidendi

The ratio of the judgment may be stated as follows:

For invoking the extended limitation under Section 74 of the CGST Act, the SCN itself must disclose the specific allegations and factual circumstances which lead the proper officer to infer fraud, wilful misstatement or suppression of facts. A mere mechanical reproduction of the statutory expressions is insufficient. Deficiencies in the SCN cannot subsequently be cured by explanations or allegations introduced through a counter-affidavit before the Court.

Consequently, where the normal Section 73 limitation has expired, the Department cannot sustain the proceedings under Section 74 unless the SCN itself contains a proper factual foundation for invoking the extended period.

Judgment

  • Allowed the Civil Appeal;
  • Set aside the order of the Madhya Pradesh High Court;
  • Set aside the SCN dated 13 June 2025;
  • Directed the State to desist from taking any further proceedings pursuant to the impugned SCN.

The Court found no reason to sustain the SCN.

Comments:

This judgment is significant because it reinforces an important distinction between the existence of departmental material and the validity of the statutory notice issued on the basis of that material.

The Department may possess extensive investigation material, statements, summons, inspection reports or other evidence. However, when the Department chooses to invoke the extended limitation under Section 74, the SCN is not merely a procedural formality. It is the document through which the assessee must be informed of the precise case that it is required to meet.

The judgment therefore places considerable importance on the quality of the SCN at the threshold stage.

Therefore, while examining a Section 74 SCN, taxpayers should specifically examine:

  1. Whether the notice is within the applicable limitation;
  2. Which specific ingredient of Section 74 is alleged — fraud, wilful misstatement or suppression of facts;
  3. What precise conduct of the taxpayer is alleged to constitute that ingredient;
  4. What facts and circumstances support that allegation;
  5. Whether the alleged conduct is linked to the tax allegedly not paid or short-paid;
  6. Whether the SCN demonstrates application of mind rather than merely reproducing statutory language; and
  7. Whether the Department is attempting to rely upon facts or explanations that are absent from the original SCN.

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