Prima facie basis for fraud or suppression sustains GST notice; threshold writ challenge rejected.

Show cause notices under Section 74 of the GST enactments were not quashed where they disclosed a prima facie basis for fraud, wilful misstatement or suppression of facts. The Court held that notices issued on scrutiny of returns and reconciliation statements, including unreconciled input tax credit, could not be struck down at the threshold merely because of alleged overlap with earlier audit proceedings under Section 73, since that issue required a reply from the assessee and further examination by the proper officer. The Court also rejected the limitation objection and upheld the notices, directing the assessee to respond and the authority to pass final orders thereafter.

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Issues: Whether the show cause notices issued under Section 74 of the GST enactments were liable to be quashed for want of foundational ingredients, alleged overlap with earlier proceedings, and alleged bar of limitation.

Analysis: The challenge arose from notices issued after scrutiny of returns and reconciliation statements, in the background of earlier audit-based proceedings under Section 73 of the GST enactments. The Court noted that the impugned notices specifically referred to unreconciled input tax credit and were issued in the course of scrutiny under Section 61, distinct from the earlier audit proceedings under Section 65. It held that, at the stage of notice, the material disclosed a prima facie basis for invoking Section 74, including the possibility of suppression of facts, and that the overlap with prior proceedings could not be conclusively determined without a reply from the assessee. The Court further held that the proceedings were not time-barred in the manner contended and that the petitioner ought to answer the notices before the proper officer.

Conclusion: The notices were upheld and the writ petitions were dismissed; the petitioner was directed to submit a reply to the notices and the respondent was directed to pass final orders thereafter.

Ratio Decidendi: Where a show cause notice under Section 74 of the GST enactments discloses a prima facie jurisdictional basis of fraud, wilful misstatement, or suppression of facts, and the factual overlap with prior proceedings cannot be adjudicated without a reply, the notice will not be quashed in writ proceedings at the threshold.

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