{"id":9294,"date":"2026-05-29T11:00:49","date_gmt":"2026-05-29T05:30:49","guid":{"rendered":"https:\/\/www.centaxonline.com\/blog\/?p=9294"},"modified":"2026-05-29T11:00:49","modified_gmt":"2026-05-29T05:30:49","slug":"section-74-invocation-invalid-where-scn-lacked-intent-to-evade-tax-allegations-hc","status":"publish","type":"post","link":"https:\/\/www.centaxonline.com\/blog\/section-74-invocation-invalid-where-scn-lacked-intent-to-evade-tax-allegations-hc","title":{"rendered":"Section 74 Invocation Invalid Where SCN Lacked Intent to Evade Tax Allegations | HC"},"content":{"rendered":"<pre><strong>Case Details: <a href=\"https:\/\/www.centaxonline.com\/latest-news-updates\/gst\/101010000000420154\/mere-inspection-findings-held-insufficient-to-invoke-section-74-where-scn-lacked-allegations-of-intent-to-evade-tax-hc\">Tvl. T. Balasubramanian vs. State Tax Officer (2026) 42 Centax 296 (Mad.)<\/a><\/strong><\/pre>\n<h2><em>Judiciary and Counsel Details<\/em><\/h2>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li><strong><span id=\"111170000000110318\">D. Bharatha Chakravarthy<\/span><\/strong>, J.<\/li>\n<li><strong>Shri N.Sudalai Muthu<\/strong>, for the Petitioner.<\/li>\n<li><strong>Shri R.Sureshkumar<\/strong>, Additional Government Pleader, for the Respondent.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><em>Facts of the Case<\/em><\/h2>\n<p>Assessment proceedings were initiated against the assessee under Section 74 of the CGST Act and the Tamil Nadu GST Act due to discrepancies between the turnover disclosed in GSTR-3B returns and the books of account. The assessee had paid the differential tax through Form DRC-03 prior to the issuance of show cause notices (SCNs). Subsequently, SCNs were issued proposing tax, interest, and penalty under Section 74. Separate penalty proceedings were also initiated for the non-filing of GSTR-9 and GSTR-9C. The assessing authority rejected the assessee\u2019s explanation and confirmed interest and penalty under Section 74. Aggrieved by these proceedings, the assessee challenged the same before the High Court.<\/p>\n<h2><em>High Court Held<\/em><\/h2>\n<p>The High Court held that, although inspection may bring unreported transactions to light, wilfulness, fraud, suppression of facts, or intent to evade tax cannot be presumed solely based on inspection findings. It was further held that proceedings under Section 74 require specific allegations regarding fraud, wilful misstatement, or suppression of facts in the show cause notice (SCN) itself. The High Court observed that neither the SCNs nor the impugned orders contained any express allegation concerning wilful suppression or intent to evade tax. Furthermore, it noted that the differential tax had already been paid before the issuance of the SCNs. Consequently, the impugned orders were set aside. The court granted liberty to the department to issue fresh SCNs under Section 73 or Section 74 in compliance with applicable law.<\/p>\n<h2><em>List of Cases Cited<\/em><\/h2>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=(2025)%2036%20Centax%20341%20(Mad.)&amp;itemType=AP\">Neeyamo Enterprise Solutions (P.) Ltd. v. Commercial Tax Officer<\/a> \u2014 (2025) 36 Centax 341 (Mad.) = 2025 (103) G.S.T.L. 352 (Mad.) \u2014 Referred [Paras 5, 9]<\/li>\n<li>S.S.Communications v. Deputy State Tax Officer \u2014 W.P.(MD) No.22420 of 2024, dated 20-9-2024 \u2014 Referred [Para 5]<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Case Details: Tvl. T. Balasubramanian vs. State Tax Officer (2026) 42 Centax&hellip;<\/p>\n","protected":false},"author":19,"featured_media":9301,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37,60,189],"tags":[],"class_list":["post-9294","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-gst","category-news","category-gst-case-chronicles"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Section 74 Invocation Invalid Where SCN Lacked Intent to Evade Tax Allegations | HC<\/title>\n<meta name=\"description\" content=\"HC rules inspection findings alone cannot invoke Section 74 where SCN lacks allegations of fraud, suppression or intent to evade tax.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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