Notice under Section 74 Quashed Due to Absence of Allegation of Fraud or Suppression

Case Details:

• Case Title: Bharat Mint & Allied Chemicals v. State of U.P. & Anr.

• Court: High Court of Judicature at Allahabad

• Petition Number: WRIT TAX No. 2527 of 2025

• Category of Dispute: Jurisdictional Validity of Section 74 Notice

• Date of Judgment: 30.05.2025

• Relevant Sections: Section 73(9) & Section 74 of the CGST Act, 2017

• Bench: Hon’ble Chief Justice Arun Bhansali & Hon’ble Justice Kshitij Shailendra

Between Fine Lines (Simple Summary in 5 Lines):

The department issued a fresh notice under Section 74 after concluding earlier proceedings under Section 73.
The court noted that the Section 74 notice lacked specific allegations of fraud, suppression, or willful misstatement.
Such ingredients are essential to invoke Section 74 jurisdiction.
The Allahabad High Court quashed the notice citing earlier ruling in M/s Vadilal Enterprises Ltd.
Authorities were granted liberty to issue fresh proceedings in accordance with law.

🧾 Facts of the Case (¶1–2):

• The petitioner received a notice under Section 73, responded on all 10 issues raised.

• An order dated 20.02.2025 under Section 73(9) accepted replies on issues except Points 1, 6, 8, and 10, where further investigation was indicated.

• Consequently, a fresh notice dated 25.02.2025 was issued under Section 74 based on those issues.

❓Question(s) in Consideration (¶3–5):

• Whether the notice issued under Section 74 is without jurisdiction due to the absence of statutory prerequisites (i.e., fraud, wilful misstatement, or suppression of facts)?

• Whether such notice is merely a continuation of the earlier Section 73 proceedings without the legal basis for invoking Section 74?

👁️‍🗨️ Observations of the Court (¶6–9):

• The notice under Section 74 neither contained any allegation of fraud, willful misstatement, nor suppression of facts as required by law (¶7).

• The same adjudicating officer had issued a similar notice in M/s Vadilal Enterprises Ltd. where this Court had held that the absence of the essential ingredients rendered the Section 74 notice invalid (¶8).

• The present notice was found to be similar in both content and procedural background to the Vadilal case.

⚖️ Judgment of the Court (¶10):

• The writ petition was allowed.

• The notice dated 25.02.2025 under Section 74 was quashed and set aside for want of jurisdiction.

• Liberty was granted to the authorities to initiate appropriate proceedings in accordance with law.

Summary of Referred Cases: