Supreme Court stays GST proceedings: SCN under Section 74 found prima facie vague and lacking material particulars {GR Infra Projects Limited, Ratlam vs. State of Madhya Pradesh & Ors. [SLP (C) No. 33594/2025}
Facts
- Petitioner, engaged in road and highway construction, was subjected to a search under Section 67 of the CGST Act in August 2022.
- Post search, the department issued a draft notice and Form DRC-01A, followed by a Show Cause Notice dated 13.06.2025 under Section 74, proposing a demand of Rs. 1.52 crore.
- The allegations broadly related to mismatch with e-way bills, alleged ineligible ITC on site offices, and post-supply vendor cancellations.
- The SCN, however, only mentioned figures and did not disclose how fraud, wilful misstatement or suppression with intent to evade tax was committed.
- The Madhya Pradesh High Court declined to interfere at the SCN stage, holding that invocation of Section 74 could be examined later.
Issue
- Whether a Show Cause Notice issued under Section 74 can be sustained when it is vague and bereft of material particulars, merely stating numerical figures without disclosing the foundational facts of fraud, wilful misstatement or suppression.
Held
- The Supreme Court observed that the SCN is prima facie bereft of material particulars.
- Except for numerical figures, the notice fails to disclose the basis or manner in which fraud, wilful misstatement or suppression was allegedly committed.
- Invocation of Section 74 requires clear articulation of jurisdictional facts, which was absent in the present SCN.
- Accordingly, the Supreme Court issued notice and stayed further proceedings pursuant to the impugned SCN.
