BACKGROUNDThe proceedings originated from audit objections concerning mismatch of Input Tax Credit (ITC) for the three financial years and short payment of tax for FY 2019-20. Communications were exchanged in relation to the audit observations and supporting documents were sought. An SCN was subsequently issued on 13.06.2025 under Section 74 of the CGST Act.The SCN was thereafter transferred to the “call book”, meaning that it was kept in abeyance, and the Department had contested the audit objection before the Public Accounts Committee. A fresh notice was subsequently issued on 01.07.2025, reviving the earlier notice and proposing a protective demand on the ground that the GST proceedings were time-bound.COURT OBSERVATIONSProceedings under Sections 73/74 can be initiated only upon the satisfaction of the Assessing Officer. Even where an audit raises objections, the Assessing Officer must independently record satisfaction before issuing the notice. For Section 74, the satisfaction must extend to the existence of fraud, wilful misrepresentation or suppression of facts leading to the mismatch or short payment.The Court rejected the Department's reliance on Explanation 2 to Section 74, noting that even according to the Department it had been omitted with effect from 01.11.2024. The Court also rejected the argument that the proceedings had been initiated before expiry of the Section 73 limitation period.The fact that the Department itself had contested the audit objections before the Public Accounts Committee indicated that there was no satisfaction on the part of the Assessing Officer regarding the mismatch or short payment, much less regarding suppression. The SCN contained only a bland statement alleging suppression and did not provide the foundational facts necessary to substantiate that allegation.The Court held that the extended limitation under Section 74 cannot be invoked merely by mechanically using expressions such as “fraud”, “wilful misrepresentation” or “suppression”. The foundational facts leading to such an inference must be apparent from the SCN itself.In the present case, the SCN did not disclose factual circumstances demonstrating any deliberate device to evade tax or avail excess ITC. The mere allegation of suppression, made to invoke the extended limitation, was insufficient to sustain proceedings under Section 74.FINAL VERDICTThe Supreme Court set aside the SCN as well as the consequential Order-in-Original dated 26.12.2025. The appeal was accordingly allowed.However, the Court granted liberty to the Department to initiate an appropriate proceeding under Section 74, if considered necessary, provided the foundational facts are set out in the notice itself and the order is passed before 28.02.2027.CASES REFERRED BY COURTIn Re: Cognizance for Extension of LimitationCourt: Supreme Court of IndiaOrder Date: 01 January 2022The Court relied upon the suo motu proceedings to take into account the exclusion of the period from 15.03.2020 to 28.02.2022 for limitation purposes, which affected the computation of the Section 73 limitation period for the relevant financial years. 

BackgroundThe matter arose from the judgment of the Gujarat High Court in SCA No. 749/2025, which considered the constitutional validity of Section 16(2)(c) of the CGST Act in the context of ITC where the supplier fails to pay the requisite tax. The High Court undertook a detailed analysis of the differences between the Delhi Value Added Tax Act, 2004 and the CGST Act, 2017, including the scheme governing availment of ITC under GST.The High Court also considered Section 41 and Sections 73 and 74 of the CGST Act, observing that under the GST regime, reversed ITC could be re-availed after the supplier-dealer discharges the tax liability. The Gujarat High Court consequently found no ground to declare Section 16(2)(c) unconstitutional or to read down its provisions.Court ObservationThe Supreme Court noted that although a special leave petition had been entertained in relation to the Tripura High Court's decision in Sahil Enterprises v. Union of India & Ors., the exercise undertaken by the Gujarat High Court was materially different. The Supreme Court specifically accepted the Gujarat High Court's detailed distinction between the Delhi VAT Act and the CGST Act and held that there was no possibility of drawing parity between the two enactments for treating a purchasing dealer under the CGST Act on the same footing as a bona fide purchasing dealer under the Delhi VAT Act when the supplier fails to pay tax.The Court further agreed with the Gujarat High Court's consideration of Sections 41, 73 and 74 of the CGST Act regarding re-availment of reversed ITC upon discharge of the supplier's tax liability.Final VerdictThe Supreme Court held that the Gujarat High Court was fully justified in concluding that no grounds existed to declare Section 16(2)(c) of the CGST Act unconstitutional or to read down the provision. The Supreme Court expressed its complete and respectful agreement with the Gujarat High Court's view and affirmed and upheld the impugned judgment.Accordingly, the Special Leave Petitions were dismissed, and any pending applications were also disposed of.Case Referred by CourtSahil Enterprises v. Union of India & Ors. — Tripura High Court, decision referred to as (2026) 154 GSTR 108 (Tri.). The Supreme Court considered the distinction between the Tripura High Court decision and the Gujarat High Court's analysis in the present matter.

BACKGROUNDTata Steel Limited filed a Writ Petition (WPT No. 2485/2026) before the High Court of Jharkhand at Ranchi, which was decided against it vide order dated 23-04-2026. Aggrieved, the petitioner approached the Supreme Court by way of a Special Leave Petition. The core issue revolves around the question of alternative remedy in the context of proceedings initiated under Section 74 of the CGST Act, 2017 — a provision dealing with determination of tax not paid or short paid on account of fraud, wilful misstatement or suppression of facts. CRUCIAL FACTSThe petitioner's senior counsel submitted before the Supreme Court that the identical question of law — i.e., whether a writ petition is maintainable when an alternative remedy exists under Section 74 of the CGST Act, 2017 — is already pending consideration before the Supreme Court in SLP (C) No. 33594 of 2025. Given this, the petitioner sought a stay on further proceedings before the lower forum and prayed that this matter be tagged along with the earlier SLP. COURT OBSERVATIONS (Verbatim)"Mr. A.M. Singhvi, learned senior counsel appearing for the petitioner submits that identical issue about alternative remedy arising out of Section 74 of the Central Goods and Service Tax Act, 2017 is pending consideration before this Court.""Till next date of hearing, the further proceedings shall remain stayed. The interim order is subject to the Court hearing SLP (C) No. 33594 of 2025 being satisfied that the issues in this case are similar to SLP (C) No. 33594 of 2025."  FINAL VERDICTThe Supreme Court issued notice, directed the matter to be listed along with SLP (C) No. 33594 of 2025, and stayed further proceedings till the next date of hearing — subject to the Court being satisfied that the issues in the present case are similar to those in SLP (C) No. 33594 of 2025.👐 FLAT (Interim stay granted — conditional; neither a final victory nor a loss for the assessee)

Facts:The respondent purchasing dealers claimed Input Tax Credit (ITC) on purchases made from various sellers. The Assessing Officer disallowed ITC on the ground that several selling dealers were deregistered, had not filed returns, or denied transactions, raising doubts about genuineness. The first Appellate Authority upheld the disallowance. However, the Tribunal and High Court allowed ITC primarily on the basis of invoices and payments through cheques. Court Decision:The Supreme Court held that the burden under Section 70 lies on the purchasing dealer to prove the genuineness of transactions. Mere production of invoices or payment through banking channels is not sufficient. The dealer must establish actual physical movement of goods and provide supporting evidence such as transport details, delivery acknowledgment, and seller details. Since the purchasing dealers failed to discharge this burden, the Court set aside the High Court and Tribunal orders and restored the disallowance of ITC by the Assessing Officer. Cases Referred by Court:•    Corporation Bank v. Saraswati Abharansala (2009) 19 VST 84 (SC) •    Bhagadia Brothers v. Additional Commissioner of Commercial Taxes (Karnataka High Court) •    Madhav Steel Corporation v. State of Gujarat (Gujarat High Court) •    Shreeji Impex v. State of Gujarat (Gujarat High Court) •    On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi   

Facts The issue before the Court was whether purchasing dealers who paid tax to registered selling dealers are entitled to Input Tax Credit even if the selling dealers failed to deposit the tax with the Government. The selling dealers were registered at the time of transactions but later defaulted and their registrations were cancelled. The Delhi High Court held that the purchasing dealers were bona fide and entitled to ITC. The Revenue challenged this decision before the Supreme Court. Court Decision:The Supreme Court dismissed the appeals and upheld the High Court’s decision. It held that where transactions and invoices are genuine and the selling dealer was registered at the time of transaction, ITC cannot be denied to bona fide purchasing dealers. The Court found no reason to interfere with the grant of ITC after due verification. Cases Referred by Court:•    On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi •    Commissioner of Trade and Taxes v. Arise India Ltd.