TaxTMI 
TaxTMI 
Key take aways from G R Infra Projects Limited, Ratlam case in Supreme Court.
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....ey take aways from G R Infra Projects Limited, Ratlam case in Supreme Court.<br>By: - K Balasubramanian<br>Goods and Services Tax - GST<br>Dated:- 27-8-2026<br>The division bench of the Supreme Court on 19/08/2026 [M/s G.R. Infra Projects Limited Ratlam Versus The State of Madhya Pradesh & Ors. - 2026 (8) TMI 1497 - SC Order] in the above case has passed a landmark judgement which is binding on all the tax officials all over India as the matter has been concluded. The core issue before the Supreme Court was whether the show cause notice issued on 13/06/2025 for the year 2018-19 is legally sustainable. The earlier understanding of the law based on the time extension made available for filing the annual return of 2018-19 was 30/06/2025 b....
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....ased on which the SCN was issued. However, there were no concrete findings on suppression or mis-statement or fraud and no mention was there in the show cause notice as to how the department concluded that section 74 is applicable. When this issue was raised by Appellant before Supreme Court, it was ruled as " 10. "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 officer 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....
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.... 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 officer to conclude that there has been employed either of these surreptitious devices by the assessee. 11. We 7nd absolutely no reason to sustain the SCN issued and 7nd the High Court to have erroneously upheld the same. We set aside the impugned order as also the SCN and direct the respondent-State 5to desist from taking any further proceedings in pursuance of the SCN challenged be....
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....fore the High Court, which is set aside by this order. 12. The Civil Appeal stands allowed". The above message is loud and clear which must reach each and every tax officials all over India to avoid inappropriate invocation of section 74. So far as for computing the time limits up to which Show Cause Notice could be issued, the Supreme Court ruled that due to Covid 19 impact, the period staring from 15/03/2020 till 28/02/2022 to be excluded. This concept may now open a pandora's box now as the time limit for issuing show cause notice may be revisited based on the above ruling by the CBIC. This has another dimension as well. The GSTAT has already set the last date for filing the appeal for all the cases where OIA is dated up to ....
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....30/04/2026 as 31/07/2026 wherein condonation of delay is possible as on date in the most deserving cases. However, for the taxpayers whose OIA falls during the period from 15/03/2020 till 28/02/2022, there is a possibility to get additional time for filing the GST appeal as on date without condonation by excluding the days up to 28/02/2022 from the date of the respective OIA, provided OIA is dated on or after 01/05/2020. Hence all taxpayers as well as tax professionals may take advantage of the above legal development supported by the views of the Supreme Court as above. Be that as it may, the case is mainly on section 74 and the most important para amongst all the 13 paras is para 10 as furnished above. Most importantly, the one sentenc....
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....e which is the crux of the judgement is "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 officer to conclude that there has been employed either of these surreptitious devices by the assessee". Above all, in future, any taxpayer when he receives a SCN under section 74 may check as to whether the following sentence is applicable to their case which reads as "In fact, the 'or' employed indicates that even the assessing officer was not sure that the assessment was proceeded by reason of fraud or on the ground of concealment of facts". Conclusion: To invoke at least any one of the three element as specified in sectio....
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....n 74 must be present and the show cause notice should not use the words such as it appears that and also should not use the word or and must categorically state what is the contravention and how the contravention is established by the department. In my view, this decision has come to help all the benches which are functional as on date to dispose cases in a simple manner where the major dispute is applicability of section 74. In all such cases, based on the above Supreme Court, relief is certain on the demand of the first two years out of the five years demand under section 74 or as applicable in the respective cases. It is appealed to all GST officials to invoke section 74 only after establishing the applicability of the section and ....
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....exactly in line with instructions of CBIC given on 13/12/2023 which reads as "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 ....
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....show cause notice, and such evidence should also be made a part of the show cause notice". =============<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....