Section 74 GST notices must disclose foundational facts supporting fraud, wilful misrepresentation, or suppression allegations.

The petitioners, Shree Hanumant Steel Traders and its proprietor, challenged notices issued by the Assistant Commissioner under Section 74(9) of the Goods and Services Tax Act, 2017, dated 16 October 2025.

The notices alleged that the petitioners had availed input tax credit on the basis of fake invoices without actual supply of goods.

The petitioners contended that the notices merely invoked fraud, wilful misrepresentation and suppression without disclosing the foundational facts supporting those allegations, relying on the Supreme Court’s decision in Tata Steels Ltd. v. Union of India .

The State opposed the petitions, asserting that the notices adequately disclosed the foundational facts and that the petitioners had an efficacious alternative remedy by way of appeal under Section 107 of the GST Act.

The Court applied Section 74(9) of the GST Act, 2017, which governs determination of tax, interest and penalty in cases involving fraud, wilful misrepresentation or suppression of facts.

It also considered Section 107, which provides an appellate remedy against GST orders.

Relying on the Supreme Court’s decision in Tata Steels Ltd. v. Union of India , [2026] 189 taxmann.com 520 (SC), the Court held that where an extended limitation or penal consequence is invoked on the basis of fraud, wilful misrepresentation or suppression, the foundational facts leading to that inference must be evident from the notice itself.

Mere mechanical recital of those expressions does not demonstrate due application of mind.

The Court examined the impugned notices and found that the authority had failed to assign sufficient reasons while issuing them under Section 74(9).

Although the State submitted that the notices alleged availment of input tax credit through fake invoices without actual supply, the Court held that such a general allegation did not adequately disclose the foundational facts necessary to support the statutory allegations of fraud, wilful misrepresentation or suppression.

Applying the principle in Tata Steels , the Court concluded that the statutory expressions could not be mechanically employed without demonstrating the factual basis and application of mind underlying the allegations.

Consequently, the notices were held unsustainable notwithstanding the availability of an alternative remedy under Section 107.

The writ petitions were accordingly allowed.

However, the respondent authority was granted liberty to issue fresh notices strictly in accordance with law, if so advised.