Writ Against Section 74 SCN Is Unmaintainable as Non-Cooperation Justifies Adjudication Over Writ Remedy

By | July 23, 2026
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Writ Against Section 74 SCN Is Unmaintainable as Non-Cooperation Justifies Adjudication Over Writ Remedy

Issue

Whether a writ petition challenging Show Cause Notices issued under Section 74 of the CGST/TNGST Act is maintainable on the ground that the demands should have been raised under Section 73, when the taxpayer failed to respond to pre-notice consultations and the matter involves disputed facts.

Facts

  • Tax Periods Involved: The case pertained to the financial years 2017-2018, 2018-2019, and 2019-2020.

  • Issuance of Notices: Following pre-notice consultations issued in Form GST DRC-01A dated 11.06.2024, the Revenue issued Show Cause Notices (SCNs) in Form GST DRC-01 dated 13.07.2024 invoking Section 74 for extended limitation due to suppression/fraud.

  • Assessee’s Non-Response: The record revealed that the petitioner filed a response only for FY 2017-2018 and submitted no response to DRC-01A for FY 2018-2019 and FY 2019-2020.

  • Writ Challenge: The petitioner filed writ petitions seeking to quash the SCNs, contending that Section 73 (non-fraud) should have been invoked instead of Section 74 due to lack of particulars.

  • Revenue’s Defense: The Revenue contended that non-cooperation and failure to produce documents constituted suppression under Explanation 2 to Section 74, justifying the invocation of Section 74.

Decision

  • Applicability of Section 74: Non-response to DRC-01A for the subsequent assessment years engaged the extended machinery of Section 74 under the operative Explanation 2 [Para 20].

  • Writ Not Maintainable: Even if the applicability of Section 74 was disputed, the proper course was for the assessee to submit a reply in Form GST DRC-06 and participate in statutory adjudication rather than seeking writ intervention amidst disputed questions of fact [Para 27].

  • Annual Independence of Assessments: Each tax year represents an independent assessment block; hence, orders passed for earlier years do not bind or restrict the Revenue’s statutory power to invoke Section 74 for subsequent years [Para 29].

  • Dismissal of Petitions: The writ petitions were dismissed, reserving liberty for the petitioner to submit replies to the impugned SCNs before the adjudicating authority [Para 30].

Key Takeaways

  • No Writ Bypass for SCNs: High Courts will generally not entertain writ petitions challenging SCNs under Article 226 when the dispute involves factual determination regarding fraud, misstatement, or suppression—adjudication must take place through statutory remedies (DRC-06 reply).

  • Non-Cooperation Triggers Extended Period: Failure to respond to pre-notice consultations (DRC-01A) or produce books of accounts can satisfy the threshold of suppression, validating the invocation of Section 74.

  • Each Financial Year Is a Separate Unit: Statutory determinations, acceptances, or findings for one financial year do not operate as res judicata or fetter the Revenue’s jurisdiction to initiate Section 74 proceedings for subsequent years.

HIGH COURT OF MADRAS
Canon India (P.) Ltd.
v.
State Tax Officer/Group – VI*
C.Saravanan, J.
W.P. Nos. 20935, 21399 and 21403 of 2024
W.M.P. Nos. 23360, 22875 and 23365 of 2024
JUNE  8, 2026
Krishna Srinivasan, Senior Counsel for the Petitioner. C. Harsharaj, Special Government Pleader for the Respondent.
ORDER
1. Heard the learned Senior Counsel for the Petitioner and the learned Special Government Pleader for the Respondents.
2. In these Writ Petitions, the Petitioner has challenged the impugned Show Cause Notices as detailed below:-
Sl. No. W.P. No. Date of Issuance of Show Cause Notice in GST DRC-01 GSTIN No. Tax Period
1. 20935 of 2024 13.07.2024 33AAACC4175D1Z5/ 2019-2020 2019-2020
2. 21399 of 2024 13.07.2024 33AAACC4175D1Z5/ 2017-2018 2017-2018
3. 21403 of 2024 13.07.2024 33AAACC4175D1Z5/ 2018-2019 2018-2019

 

3. Earlier, this case was heard at length along with a batch of cases where proceedings under Section 74 of the respective GST Enactments were challenged. After the submissions of the learned Senior Counsel for the Petitioner, the present cases were to be reserved for passing orders along with the said batch.
4. However, during the interregnum, the learned Senior Counsel for the Petitioner, requested for de-tagging these cases for passing separate orders in terms of the decision of the Division Bench of this Court in BASF Catalysts India Private Limited, Represented by its Authorized Signatory v. The Deputy Commissioner (ST)-I, Chennai [W.A. Nos.1258, 1259, 1260, 1261 and 1262 of 2024, dated 28.03.2025].
5. Earlier, the learned Senior Counsel for the Petitioner had advanced arguments on behalf of the Petitioner based on the decision of the Hon’ble Supreme Court in CCE v. H.M.M. Limited 1995 (3) SCC 322.
6. The learned Senior Counsel for the Petitioner would submit that the Petitioner had been issued with three other Show Cause Notices for the Tax Period 2020-2021, 2021-2022 and 2022-2023 impugned in Cannon India Ltd. v. State Tax Officer [W.P. Nos.20931, 21416 and 21422 of 2024, dated 04.11.2024] along with the impugned Show Cause Notices for the Tax Period 2017-2018, 2018-2019 and 2019-2020.
7. Vide Order dated 06.08.2024 in these three Writ Petitions, the Court ordered as under:-
“6. As far as W.P.Nos.20931, 21416 and 21422 of 2024 are concerned they are pertaining to Assessment Years 2020-2021, 2021-2022 and 20222023, Show Cause Notices were issued well within the period of three years. Therefore, in the event if this Court concludes that the Show Cause Notice was issued under Section 74(1) of the Act, is not sustainable, the officers can proceed under Section 73(1) for the Assessment Years 2020-2021, 2021-2022 and 2022-2023 alone. Therefore, there shall be an order of interim stay in W.P.Nos.21399, 21403 and 20935 of 2024.
6. As far as W.P.Nos.20931, 21416 and 21422 of 2024 are concerned, notice to the Respondents returnable by 27.08.2024. Private Notice is also permitted.
7. At this juncture, the learned Senior Counsel for the Petitioner seeks time for filing reply to the Show Cause Notices issued which are all challenged in W.P.Nos.20931, 21416 and 21422 of 2024 by eight weeks time. However, the learned counsel for the Respondent made objection for the said submission.”
8. Therefore, by Order dated 04.11.2024, W.P.Nos.20931, 21416 and 21422 of 2024, were disposed with the following observations:-
“When the matters were taken up for hearing, it was submitted by the learned Senior Advocate for the petitioner(s) that the above three writ petitions are filed challenging the show cause notice dated 13.07.2024 in DRC-01 for the assessment years 2020-21, 2021-22 and 2022-23 respectively and there was also an interim direction to submit their reply. The learned Senior Advocate further submitted that replies to the show cause notice have also been submitted by the petitioner.
2. In response to the same, Mr.C.Harsha Raj, learned Additional Government Pleader appearing for the Respondents would submit that orders would be passed by the Respondents after considering the objections and granting the petitioner an opportunity of hearing.
3. Recording the same, these writ petitions are closed. The 1st Respondent shall consider the objections filed by the petitioner and orders shall be passed in accordance with law after affording a reasonable opportunity of hearing to the petitioner. No costs. Consequently, connected miscellaneous petitions are closed.”
9. It is further submitted that these cases can be remitted back to the Respondents by quashing the impugned Show Cause Notices with a direction to the Respondents to issue fresh Show Cause Notices under Section 73 of the respective GST enactments in the light of the decision of this Court in Tata Play Ltd. v. Union of India  (Madras)/W.P.Nos.17184 of 2024 etc., batch dated 12.06.2025 as modified by 05.11.2025 [2025 32 Centax 318]. Paragraph No.3 of the Order dated 05.11.2025 is reproduced below:-
Sl. No. Financial Year Actual / Original due date for filing Annual Return under Section 44(1) Due date extended in exercise of power under Section 44 of CGST Act through Notifications Period of limitation under Section 73(10) of CGST Act Extended time limit under Section 73(10) for issuance of order under Section 73(9) in exercise of power under Section 168A of CGST Act (upto) Limitation under Section 73(10) after exclusion of period 15.03.2020 to 28.02.2022 as per Order dated 10.01.2022 of the Hon’ble Supreme Court
1. 2017-2018 31.12.2018 05.02.2020 07.02.2020 (Notification No.06/2020) 05.02.2023 31.12.2023 (Notification No.09/2023) 21.01.2025 Adding 715 days
2. 2018-2019 31.12.2019 31.12.2020 (Notification No.80/2020) 31.12.2023 30.04.2024 (Notification No.56/2023) 27.02.2025 Adding 424 days
3. 2019-2020 31.12.2020 31.03.2021 (Notification No.04/2021) 31.03.2024 31.08.2024 (Notification No.56/2023) 28.02.2025 Adding 334 days

 

10. The learned Senior Counsel for the Petitioner submitted that in view of the Impugned Show Cause Notices, the Petitioner is being denied the benefit of the Authorised Economic Operator (AEO) Programme of the Central Board of Excise of Customs, presently known as the Central Board of Indirect Taxes and Customs, in terms of Circular No.33/2016-Customs dated 22.07.2016. Such denial is on account of the impugned Show Cause Notices dated 13.07.2024 issued to the Petitioner for the Tax Periods 2017-2018, 2018-2019 and 2019-2020, which are the subject matter of these Writ Petitions.
11. It is submitted that there was a fatal error for issuance of the respective Show Cause Notices dated 13.07.2024 long after the expiry of limitation.
12. The learned Senior Counsel for the Petitioner further submitted that the matter may be remitted back to the Respondents for re-examination of the issue after recording whether there is any shortfall in payment of tax, if any, falling within the scope of Section 73 of the respective GST Enactments.
13. In support of the said contention, reliance was placed on the decision of the Division Bench of this Court in BASF Catalysts India Private Limited (referred to supra), wherein, the Hon’ble Division Bench observed as under:-
“2. The charges of fraud or willful misstatement or suppression of facts to evade tax made in the show cause notices shall be deemed to have been scored off or redacted.
3. Appellant shall reply to the show cause notices within six weeks from today. The show cause notices shall be disposed by a reasoned order dealing with all submissions of appellant. Before passing any order, a personal hearing shall be given, notice whereof shall be communicated at least seven working days in advance.
4. If the Adjudicating Authority is going to rely on any judgment of any Court or Tribunal, a list thereof shall be made available along with the notice for personal hearing, so that appellant will be able to deal with/distinguish the same during the personal hearing.
5. Appeals stand disposed of. There shall be no order as to costs. Consequently, all interim applications are closed.”
14. The learned Senior Counsel for the Petitioner drew the attention of this Court to the averments made in Paragraph 3 of the Affidavit filed in support of the Writ Petitions, Paragraph 8 of the Counter Affidavit filed by the Respondents, and Paragraph 12 of the Rejoinder.
15. It is submitted that although Section 74 of the respective GST Enactments has been invoked, the Show Cause Notices issued thereafter do not contain any details justifying the invocation of Section 74 of the respective GST Enactments. Therefore, it is contended that the Petitioner’s case requires re-examination from the perspective of Section 73 of the respective GST Enactments.
16. The learned Special Government Pleader for the Respondents, on the other hand, submitted that the facts of the present cases are totally different and therefore the decision of the Division Bench of this Court in BASF Catalysts India Private Limited (referred to supra) is not applicable to the facts of the present cases.
17. The learned Special Government Pleader for the Respondents further submitted that the Petitioner had not cooperated during the inspection conducted under Section 67 of the respective GST Enactments and had also failed to produce the necessary documents. It is therefore submitted that in terms of the definition of “Suppression” in Explanation-2 to Section 74 of the respective GST Enactments, such failure to furnish the documents would also constitute “Suppression of facts”.
18. I have considered arguments advanced by the learned Senior Counsel for the Petitioner and the learned Special Government Pleader for the Respondents.
19. The challenge to the impugned Show Cause Notices on the ground of limitation has to be answered against the Petitioner in the light of the views expressed by this Court today by a common order in the case of Turbo Energy (P.) Ltd. v. Additional Commissioner [W.P. No. 2142 of 2026, dated 22.01.2026], Fastenex (P.) Ltd. v. Union of India [W.P. Nos. 35967, 35970, 35974 and 35976 of 2024] and Ispahani Estates (P.) Ltd. v. State Tax Officer [W.P. Nos. 14487, 14492 and 14500 of 2025, dated 8-6-2026]. The ratio therein applies to the facts of the present cases.
20. The larger issue regarding invocation of extended period of limitation is also answered against the Petitioner today in Turbo Energy (P.) Ltd. (supra), Fastenex (P.) Ltd. (supra) and Ispahani Estates (P.) Ltd. (supra), by a Separate Order. The ratio therein applies to the facts of the present case.
21. The impugned Show Cause Notices had been issued long before the expiry of limitation prescribed under Section 74 of the respective GST Enactments.
22. Facts on record reveal that the impugned Show Cause Notices were preceded by an Intimation in GST DRC-01A all dated 11.06.2024. They were also replied by the Petitioner on the dates mentioned in the Show Cause Notices for the respective Tax Periods.
23. The Petitioner replied to the intimation in GST DRC-01A only for the Tax Period 2017-2018. The Petitioner has not replied for the Tax Period 2018-2019 and 2019-2020. Without a reply to the Show Cause Notice, order can be passed under Section 73 or Section 74 of the respective GST Enactments.
24. The fact that the Petitioner has not replied to the intimation in GST DRC-01A all dated 11.06.2024 for the Assessment Years 2018-2019 and 2019-2020 itself invites the invocation of machinery under Section 74 of the respective GST Enactments in view of definition of the expression “Suppression” in the Explanation-2 to Section 74 of the respective GST Enactments which came to be deleted only later by virtue of Finance (No.2) Act, 2024 (15/2024) dated 16.08.2024.
25. Therefore, even otherwise invocation of Section 74 of the respective GST Enactments for the Tax Period 2018-2019 and 2019-2020 covered by W.P.Nos.21403 and 20935 of 2024 cannot be challenged.
26. Even if Section 74 of the respective GST Enactments was wrongly invoked, it is for the Petitioner to establish the case by filing a reply in Form GST DRC-06. It is not possible to straight away to come to a conclusion that invocation of machinery under Section 74 of the respective GST Enactments was without jurisdiction without a proper reply from the Petitioner and adjudication by the Respondents.
27. Besides, there are several disputed questions of facts which cannot be decided in a summary proceeding under Article 226 of the Constitution of India. Therefore, these Writ Petitions under Article 226 are not maintainable and are liable to be dismissed.
28. That apart, even if orders have been passed for the Assessment Years 2020-2021, 2021-2022 and 2022-2023, challenge to invocation of Section 74 of the respective GST Enactments for these Assessment Years namely 2017-2018, 2018-2019 and 2019-2020 cannot be countenanced, as each tax year is an independent block and if there are ingredients to invoke extended period of limitation, such proceedings can be initiated under Section 74 of the respective GST Enactments and cannot be scuttled or short-circuited under Article 226 of the Constitution of India.
29. Therefore, I see no merits in the challenge to the impugned Show Cause Notices.
30. These Writ Petitions are therefore liable to be dismissed and are accordingly dismissed. However, liberty is given to the Petitioner to file a reply to the respective Show Cause Notices in GST DRC-01 dated 13.07.2024.
31. In case the Petitioner complies with the above stipulation, the 1st Respondent shall proceed to pass a final order on merits and in accordance with law as expeditiously as possible, preferably, within a period of three (3) months of such reply. Subject to the Petitioner complying with the above stipulation, the attachment of the bank account of the Petitioner shall also stand automatically vacated.
32. In case the Petitioner fails to comply with the above stipulation, the 1st Respondent is at liberty to proceed against the Petitioner to recover the tax in accordance with law as if these Writ Petitions were dismissed in limine today.
33. Needless to state, before passing any such order, the 1st Respondent shall give due notice to the Petitioner. No costs. Connected Writ Miscellaneous Petitions are closed.