Show Cause Notice Issued Beyond COVID-Extended Limitation

Show Cause Notice Issued Beyond COVID-Extended Limitation and Lacking Particulars Is Legally Unsustainable

Issue

Whether a Show Cause Notice (SCN) issued under Sections 73 and 74 for FY 2018-19 is legally valid when issued past the COVID-extended limitation period and based on vague, unparticularized allegations of fraud.

Facts

Period Under Consideration: Financial Year 2018-19.
Annual Return Due Date: The due date for filing the annual return for FY 2018-19 was statutorily extended up to 31.12.2020.
Normal Limitation Window: Under Section 73, the ordinary 3-year limitation period calculated from the due date of the annual return expired on 31.12.2023.
COVID Exclusion Impact: Excluding the COVID period (15.03.2020 to 28.02.2022—amounting to 1 year and 2 months) pushed the maximum extended outer limitation limit to 28.02.2025.
Issuance of SCN: The State Revenue authority issued the impugned SCN on 13.06.2025 (post 28.02.2025).
Deficiencies in SCN: The notice mechanically invoked Section 74 using the phrase ‘fraud or concealment of facts’ without detailing specific material facts, particulars, or basis.
Attempted Cure by Revenue: The Revenue tried to supplement and justify the vague allegations through its counter-affidavit filed before the High Court.
High Court Judgment: The High Court initially upheld the validity of the SCN.

Decision

Time-Barred Under Section 73: The SCN dated 13.06.2025 was issued beyond the COVID-extended limitation deadline of 28.02.2025 and was therefore hit by limitation under general provisions.
Defects Cannot Be Cured by Affidavit: Validity must be judged from the face of the notice itself; a counter-affidavit cannot cure inherent vagueness or lack of particulars in an SCN.
Vague Invocation of Extended Period: Mechanical incantations using ‘or’ demonstrate uncertainty, failing to fulfill mandatory statutory requirements of specifying acts of fraud, wilful misstatement, or suppression.
Appeal Allowed: The Supreme Court set aside the High Court’s judgment and quashed the impugned Show Cause Notice. Held in favour of the assessee.

Key Takeaways

Strict Outer Bound for Limitation: Even after accounting for COVID-19 suo motu extension periods, SCNs under Section 73 issued after the extended deadline (28.02.2025 for FY 2018-19) are time-barred and void.
Self-Containment of SCN: The legality of an SCN must stand on its own text; Revenue cannot repair or supply missing factual particulars later via court affidavits.
Prohibition of Mechanical Section 74 Invocation: Alleging fraud or suppression to bypass standard limitation periods requires clear, specific material facts disclosed upfront in the notice rather than vague, template assertions.

SUPREME COURT OF INDIA

G.R. Infra Projects Ltd.

State of Madhya Pradesh

J.B. Pardiwala and K. Vinod Chandran, JJ.

Civil Appeal No.11277 of 2026
Special Leave Petition (C) No. 33594 of 2025

AUGUST 19, 2026

Jatin Harjai, Rohan Aggarwal, Ms. Nikshubha Sharma, Ms. Mallika Joshi, Amit Bhandari, Ms. Nishtha Mittal, Abhishek Swami, Avishkar Singhvi, Advs., Vatsalya Vigya, Suhaas Ratna Joshi, AORs and Kavin Gulati, Sr. Adv. for the Petitioner. Rudraditya Khare, D.A.G., Ms. Mrinal Gopal Elker, Gurmeet Singh Makker, AORs, Sai Shashank, Kartikeya Asthana, Karan Lahiri, Seema Bengani, S. Vijay Adithya, Advs. and S. Dwarakanath, A.S.G. for the Respondent.

ORDER

1. Leave granted.

2. We are, in this appeal, concerned with the Show Cause Notice (SCN) issued by the respondent-department for the assessment year 2018-19 dated 13.06.2025. The question arising is as to whether the notice can be one deemed to have been issued under Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act) read with Madhya Pradesh Goods and Services Tax Act, 2017 (MPGST Act).

3. The assessee, who is the appellant herein, would submit that a notice issued under Section 74 can only be issued when there is a fraud/ willful misstatement/ suppression of facts alleged; which allegation has to come out from the notice itself.

4. Learned Counsel appearing for the appellant submits that the SCN is beyond the time of three years provided under Section 73 for determination of tax inter alia short paid, for any reason other than fraud, willful misstatement or suppression of facts. The learned Government Advocate, however, attempts to take us through the counter affidavit in which according to him the allegations of fraud and suppression of facts have been elaborated, justifying the proceedings under Section 74 and not under Section 73.

5. We refused to look at the counter affidavit on the trite principle that when an authority has issued a notice or an order, the requirements to make the notice or order valid should be contained in such notice or order and cannot be supplanted by a counter affidavit in Court, where the notice or order is alleged to be invalid for reason to non-application of mind, the requirements having not met and so on and so forth.

6. As far as the CGST Act is concerned, sub-section (2) of Section 73 mandates that the proper officer shall issue notice under subsection (1) at least three months prior to the time limit specified in sub-section (10). Sub-section (10) provides that the proper officer shall issue the order under Section 9 within three days from the due date for furnishing of annual return for the financial year relevant to such proceedings. Sub-section (1) of Section 44 provides for furnishing an annual return within such time and in such form and in such manner as is prescribed. Rule 80 of the CGST Rules prescribes the furnishing of an annual return for every financial year as specified under Section 44 electronically on or before the 31^st day of December following the end of such financial year. Hence, for the relevant assessment year 2018-2019, the annual returns were to be filed on or before 31.12.2019.

7. The CGST Act came into force on 01.07.2017 and initially for reason of fresh introduction of the electronic systems, the last date for filing annual returns was extended for the years commencing from 2017-2018 onwards by notifications issued under Section 44(1). Insofar as the assessment year 2018-2019 is concerned, successive notifications, extended the time to furnish annual return and eventually it stood at 31.12.2020. Hence, the limitation for issuing a notice under Section 73 expires on 31.12.2023.

8. In the meanwhile, COVID struck and this Court in Writ Petition (C) No.3/2020 registered as Cognizance For Extension of Limitation, In re 220 COMP CASE 447 (SC) extended the limitation as provided in the various statutes, in the wake of the pandemic and eventually by order dated 01.01.2022, the Suo Motu Writ Petition was disposed of with directions, inter alia providing for exclusion of limitation for the period between 15.03.2020 to 28.02.2022. While computing limitation, the period excluded by this Court coming within the three-year period for 2018-2019 is 1 year and 2 months, which has to be excluded and further time provided from 31.12.2023 in lieu of the excluded period. Hence, the extended period of limitation falls on 28.02.2025. The SCN issued in this case on 13.06.2025 for the assessment year 2018-2019 definitely hit by limitation under Section 73. Now the question is as to whether Section 74 can be invoked.

9. The present proceedings were initiated by summons issued dated 03.03.202 relating to the business for the years 2017-2018 to 2020-2021. From the counter affidavit filed by the State, it is seen that the petitioner sought time initially, but did not produce the required documents before the assessing officer. An inspection was conducted in the premises of the assessee and statements were recorded from the Accountant, Authorized Signatory and the Director of the assessee on various dates. It is alleged that in the very many hearings scheduled between 01.09.2022 and 07.02.2025; on 20 occasions, the assessee did not appear. A draft notice-cum-investigation report dated 03.03.2025 was prepared and an intimation under Section 142 (1A) dated 29.04.2025 was issued to the petitioner. The petitioner raised preliminary objections by response dated 14.05.2025 specifically pointing out that the draft notice has not been served on them. The draft notice was served on 27.05.2025 based on which additional response was submitted by the petitioner. It was later that SCN dated 13.06.2025 was issued under Section 74.

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 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 find absolutely no reason to sustain the SCN issued and find the High Court to have erroneously upheld the same. We set aside the impugned order as also the SCN and direct the respondent-State to desist from taking any further proceedings in pursuance of the SCN challenged before the High Court, which is set aside by this order.

12. The Civil Appeal stands allowed.

13. Pending application(s), if any, shall stand disposed of.