TaxTMI 
TaxTMI 
It is being reiterated that section 74 is grossly misused by GST officials all over India. Despite the CBIC Instructions dated 13/12/2023, many SCNs covering tax period up to 31/03/2024 are being issued by invoking section 74 for the two reasons of availability of extended period for issuing such SCN as well as higher penalty. It is a very important message to all the taxpayers as well as tax professionals across INDIA that CBIC instructions are squarely binding on GST officials. At the cost of repetition, the operative para of CBIC instructions dated 13/12/2023 is furnished below for ready reference to all concerned as further damages may be avoided to the extent possible.
'3.3 From the perusal of wording of section 74(1) of CGST Act, it is evident that section 74(1) can be invoked only in cases where there is a fraud or wilful mis- statement or suppression of facts to evade tax on the part of the said taxpayer. Section 74(1) cannot be invoked merely on account of non-payment of GST, without specific element of fraud or wilful mis-statement or suppression of facts to evade tax. Therefore, only in the cases where the investigation indicates that there is material evidence of fraud or wilful mis-statement or suppression of fact to evade tax on the part of the taxpayer, provisions of section 74(1) of CGST Act may be invoked for issuance of show cause notice, and such evidence should also be made a part of the show cause notice.
4. The above aspects may be kept in consideration while investigating such cases and issuing show cause notices'.
As we are only in June 2026 and SCN under section 74 is possible till 30/06/2029 for the year 2023-24, all taxpayers and tax professionals must be highly vigilant to ensure that Section 74 is invoked only in line with para 3.3 of CBIC instructions as above. Prior to 30/06/2017, tax professionals take merits of the case as first line for arguments and invocation of extended period is not stressed too much before CESTAT. The scenario has totally changed today and as the GST officials are invoking section 74 in almost 90% of the cases even without establishing that there exists a strong ground for such invocation by using language like it appears that the taxpayer suppressed the facts, it appears that the taxpayer has not paid GST with intention evade payment etc. which is not a sufficient compliance of para 3.3 above, the arguments on non -applicability of 74 must be made now strongly before GSTAT.
The trigger for this article today is the recent judgement during May 2026 by the Kerala High Court wherein the court has ruled that single show cause notice covering 2017-18 till 2023-24 is impermissible and department is free to issue separate SCN for applicable years by excluding time spent before H C for limitation. This is too much to cover seven years in one SCN. The notices are normally issued only by extracting relevant data from GST returns. Such returns are being filed only on a monthly or annual basis as per requirements. That being the case, only for the sake of their own convenience as well as to reduce their workload, consolidated SCN are being issued even today despite ruling by all jurisdictional high courts that this practice is not good. Hence it is appealed to the GST Council and CBIC that suitable instructions/ circulars may please be issued immediately to dispense with the issuance of consolidated show cause notices with immediate effect.
One of the state tax authorities in Ernakulam jurisdiction in Keral issued one show cause notice on Aranmula Chit Funds private limited by invoking section 74 which was quashed by the Kerala High court in WP ( C ) 20523 of 2025 on 26/05/2026. The court passed the above order based on the decision of the division bench of the same court.
There is one more message to all concerned from the High Court of Telangana High Court on 08/06/2026 as reported in M/s. Divya Textile Industries Versus The Assistant Commissioner, Vanasthalipuram-I Circle, Telangana. - 2026 (6) TMI 634 - TELANGANA HIGH COURT where it was held that OIO passed on 02/09/2024 as against the deadline date of 31/08/2024 is impermissible and accordingly that OIO was set aside appropriately.
In order to facilitate the taxpayers as well as tax professionals to take advantage of this timelines which are mandatory and not directory, it is to be ensured that SCN under Section 73 is possible only for 2022-23 and 2023-24 as on date. The deadline for 2022-23 under 73 ends on 30/09/2026. Similarly for section 74, deadline ends on 31/08/2026 for the year 2020-21, provided there exists ground for such invocation.
Let us conclude by summing up that 1) Single SCN for multiple years are to be contested based on high court rulings. 2) Invocation of section 74 to be taken up vehemently based on CBIC Instructions. 3) Timelines for issuance of SCN as well as for passing OIO under 73 as well as 74 are NOT DIRCETORY but MANDATORY. Accordingly, all the three above points may be taken to the advantage of the aggrieved taxpayer for ensuring proper justice.