Applying the Supreme Court’s ruling in Tata Steel, the Court held that a notice lacking any foundational facts of fraud, wilful misstatement or suppression is invalid, and so is every order founded on it.
The Tripura High Court has set aside Section 74 proceedings against a taxpayer accused of generating e-way bills for outward supplies without paying tax or filing returns, holding that the notice failed to disclose any basis for invoking the extended provision [Mr. Basir Ali v. State of Tripura & Ors.].
The bench of Chief Justice M.S. Ramachandra Rao and Justice S. Datta Purkayastha noted that an intimation in Form DRC-01A under Section 74(5) had alleged non-payment of tax against e-way bills for June 2023 to August 2024, followed by an order confirming the demand. The respondents did not dispute that the notice contained no foundational facts and did not use the words fraud, wilful misstatement or suppression at all.
Relying on M/s Tata Steel Ltd. v. Union of India, where the Supreme Court held that “the foundational facts which led to the inference arrived at of fraud/willful misrepresentation/suppression should be evident from the notice itself”, the Court held the notice invalid in law and every order based on it illegal, arbitrary and without jurisdiction.
The impugned orders, show cause notice and consequential order were quashed. The ruling underlines that even where the underlying allegation appears serious, Section 74 cannot be sustained if the notice itself does not state why fraud or suppression is alleged.
2026-juristway.com-3097-HC(Tripura)-GST
