GST notice validity turns on fraud allegations and reasoned hearing-compliant adjudication under the Act.

Section 74 of the Nagaland GST Act can be invoked only where the notice expressly alleges fraud, wilful misstatement, or suppression of facts to evade tax; notices that merely state tax and interest liability without those jurisdictional facts are invalid. Section 75 requires a hearing before adverse adjudication and a reasoned order setting out the relevant facts and basis of decision; orders passed without hearing or reasons are unsustainable. The HC set aside the notices and consequential orders, while leaving the authorities free to commence fresh proceedings in accordance with law.

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Issues: (i) whether a show cause notice under Section 74 of the Nagaland Goods and Services Tax Act, 2017 was valid without allegations of fraud, wilful misstatement, or suppression of facts to evade tax; (ii) whether the impugned adjudication orders were sustainable when no opportunity of hearing was granted and the orders did not set out the relevant facts and basis of decision.

Issue (i): whether a show cause notice under Section 74 of the Nagaland Goods and Services Tax Act, 2017 was valid without allegations of fraud, wilful misstatement, or suppression of facts to evade tax.

Analysis: Section 74 can be invoked only where non-payment, short payment, erroneous refund, or wrongful availment or utilisation of input tax credit is attributable to fraud, wilful misstatement, or suppression of facts to evade tax. The notices issued to the petitioners merely referred to the remaining tax and interest liability and did not disclose the foundational ingredients required for invoking Section 74. In the absence of those jurisdictional assertions, the notices failed to satisfy the statutory threshold.

Conclusion: The show cause notices under Section 74 were invalid and could not be sustained.

Issue (ii): whether the impugned adjudication orders were sustainable when no opportunity of hearing was granted and the orders did not set out the relevant facts and basis of decision.

Analysis: Section 75 requires observance of the right of hearing when an adverse decision is contemplated and further mandates that the proper officer state the relevant facts and the basis of the decision in the order. The impugned orders were passed without affording a hearing and without recording the facts and reasons supporting the demand. The procedural safeguards under Section 75 were therefore not complied with.

Conclusion: The impugned adjudication orders were unsustainable and liable to be quashed.

Final Conclusion: The writ petitions succeeded, the notices and consequential orders were set aside, and the respondents were left at liberty to initiate fresh proceedings in accordance with law.

Ratio Decidendi: Proceedings under Section 74 of the Nagaland Goods and Services Tax Act, 2017 are jurisdictionally valid only when the notice expressly discloses fraud, wilful misstatement, or suppression of facts to evade tax, and any adverse tax order must comply with the hearing requirement and reasoned-order mandate under Section 75.

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