Two rulings in one week — the Supreme Court on 19 August 2026 and the GSTAT Thiruvananthapuram Bench on 21 August 2026 — have together closed the door on the Department’s most common shortcut: invoking Section 74 without alleging, in the notice itself, what the fraud or suppression actually was.
The ruling in brief
In M/s G.R. Infra Projects Limited v. State of Madhya Pradesh & Ors. (Civil Appeal No. 11277 of 2026, arising out of SLP (C) No. 33594 of 2025, decided 19.08.2026), a Bench of Justices J.B. Pardiwala and K. Vinod Chandran set aside a Show Cause Notice dated 13.06.2025 issued under Section 74 of the CGST/MPGST Act for FY 2018-19, and also set aside the Madhya Pradesh High Court’s order (WP No. 40749/2025, dated 29.10.2025) which had upheld it.
The Court held that a notice which merely recites the words “fraud or concealment of facts” — without setting out the material from which fraud or suppression is inferred — cannot be treated as a valid Section 74 notice. Once Section 74 falls, the notice is tested against Section 73, and on that footing it was hopelessly time-barred.
The State was directed to desist from any further proceedings in pursuance of the SCN.
What the Court actually decided
1. Section 73 limitation for FY 2018-19 expired on 28.02.2025
The Court worked through the limitation arithmetic with a precision that practitioners will find useful as a ready reckoner:
| Step | Position |
|---|---|
| Due date for annual return (FY 2018-19), after successive extensions under Section 44(1) | 31.12.2020 |
| Outer limit for order under Section 73(10) — three years from that date | 31.12.2023 |
| COVID exclusion per Re: Cognizance for Extension of Limitation (order dated 10.01.2022 disposing of Suo Motu WP (C) No. 3/2020) — period 15.03.2020 to 28.02.2022 | Portion falling within the three-year window: 1 year and 2 months |
| Extended outer limit under Section 73(10) | 28.02.2025 |
| SCN actually issued | 13.06.2025 |
The Court’s conclusion was unambiguous: the SCN was “definitely hit by limitation under Section 73”. The only question left was whether Section 74 could be invoked to rescue it.
Two points are worth noting for those handling FY 2018-19 and FY 2019-20 matters. First, the Court applied the Suo Motu exclusion to Section 73(10) without any reservation — the Department’s periodic contention that the Suo Motu orders do not extend departmental limitation does not survive this ruling. Second, the Court computed the exclusion only to the extent the excluded period overlapped with the three-year window — not the full 23-odd months — which is the correct reading of the Suo Motu order and is the method now carrying Supreme Court endorsement.
2. The notice must carry its own justification — no supplementing by counter-affidavit
The State attempted to take the Court through its counter-affidavit, in which the allegations of fraud and suppression had been elaborated for the first time. The Court refused to look at it, on what it described as the “trite principle” that where the validity of a notice or order is challenged for non-application of mind or for the statutory requirements not having been met, those requirements must be found within the notice or order itself and cannot be supplied later through an affidavit in court.
This is a restatement of the Mohinder Singh Gill line of reasoning, now applied squarely to GST Section 74 notices. Its practical effect is significant: a Section 74 SCN stands or falls on its own text. Every subsequent attempt to bolster it — in the adjudication order, in the appellate order, or in pleadings before a court — is legally irrelevant to the question of whether the extended period was validly invoked.
3. “Fraud or concealment” — the word “or” gave the game away
Paragraph 10 of the order deserves to be read in full by every adjudicating officer. The Court found that, apart from a “bland statement” of fraud or concealment of facts, the notice said nothing about how fraud was inferred or how concealment was detected.
The Court then made a sharper observation: the use of the disjunctive “or” between fraud and concealment indicated that even the assessing officer was not sure which of the two he was proceeding on. An officer who has actually found suppression knows what he has found. The alternative pleading, the Court reasoned, is itself evidence that no specific finding existed.
The operative test laid down is this: the allegations which lead to the inference of fraud or of suppression of facts must emanate from the notice itself. The “mechanical use of the words ‘fraud, wilful misstatement or suppression of facts’ without listing out the aspects” which persuaded the officer to that conclusion is not enough.
4. Non-cooperation by the assessee did not save the notice
The State’s counter-affidavit narrated a long history: summons from 03.03.2022 covering FY 2017-18 to 2020-21, an inspection of the premises, statements recorded from the accountant, authorised signatory and director, and the assessee’s non-appearance on twenty occasions between 01.09.2022 and 07.02.2025. A draft notice-cum-investigation report was prepared and served after the assessee objected to non-service.
None of this carried the day. The reason is structural: non-cooperation with an enquiry, however prolonged, is not the same thing as suppression of facts to evade tax. The statute requires the latter, and it requires the notice to say so with particulars. The Court’s refusal to travel outside the notice meant the entire investigative history, however it reflected on the assessee, was simply not available to cure the defect.
Related: GSTAT Thiruvananthapuram on Section 74
The GST Appellate Tribunal, Thiruvananthapuram Bench, has taken the same view in Santhome Latex Enterprises (Final Order No. 04/TVP/KERALA/2026, dated 21.08.2026), holding that suppression must be proved, not presumed. Read our analysis here: https://sashthitaxlegal.com/news/suppression-must-be-proved-not-presumed-gstat-thiruvananthapuram-q…
What this means for pending matters
For every Section 74 notice, the first question is now: what does the notice itself say? Not the investigation report, not the audit findings, not the adjudication order — the notice. If the SCN recites the statutory phrase and then proceeds to a computation of differences, the extended period has not been validly invoked.
For FY 2017-18 to FY 2019-20, the limitation consequence is decisive. If Section 74 fails, the notice is tested under Section 73, and for those years the Section 73(10) window (even with COVID exclusion) has closed. The demand does not get reduced — it goes entirely. G.R. Infra Projects gives the computation method the Supreme Court’s authority.
Alternative or disjunctive pleading in the SCN is now a ground in itself. “Fraud or wilful misstatement or suppression” pleaded in the alternative, without the officer committing to which one and why, is evidence of the absence of a finding. This should be taken as a specific ground in every reply and appeal.
The Department’s post-notice material is irrelevant to validity. Investigation reports, statements recorded, non-cooperation history — all of this may be relevant to the merits of the demand under Section 73, but none of it can be used to justify Section 74 if the notice did not set it out. Replies should expressly object to any such reliance.
For appeals pending before GSTAT, the Santhome Latex ruling should be cited alongside the Supreme Court’s order.
A closing observation
Section 74 was designed as the exception — a provision for the taxpayer who knew, and concealed. It became the Department’s default because the consequences of invoking it (extended limitation, enhanced penalty, exclusion from Section 128A amnesty) were attractive and the cost of invoking it wrongly was, until now, close to nil.
G.R. Infra Projects changes that calculus. A Section 74 notice that cannot justify itself from its own four corners is not a defective Section 74 notice — it is a Section 73 notice, and it must meet Section 73’s clock. For a large body of FY 2017-18 to FY 2019-20 litigation currently pending, that is the whole case.
This article is for general information and professional discussion only and does not constitute legal advice. Case references: G.R. Infra Projects Limited v. State of Madhya Pradesh & Ors., Civil Appeal No. 11277 of 2026, Supreme Court of India, order dated 19.08.2026; Santhome Latex Enterprises v. Commissioner of CGST, Final Order No. 04/TVP/KERALA/2026, GSTAT Thiruvananthapuram Bench, dated 21.08.2026.