The Allahabad High Court has quashed a show cause notice under Section 74 of the CGST Act that — unusually — contained a formal paragraph in Hindi accusing the petitioner of having misled the same High Court in a previous writ proceeding. While the court upheld the Revenue's right to issue the SCN in principle (on all the jurisdictional and limitation grounds contested by the petitioner) and rejected every argument the petitioner raised on those points, it nonetheless quashed the notice solely because the presence of such an allegation in the SCN itself disclosed pre-existing prejudice in the adjudicating officer that would preclude fair adjudication. The ruling, by a Division Bench of Justice Saumitra Dayal Singh and Justice Arun Kumar in HCL Infotech Ltd. v. State of Uttar Pradesh (Writ Tax No. 3378 of 2026, decided 06.08.2026), is a striking example of natural justice enforced in an otherwise revenue-favourable outcome.
The history matters. HCL Infotech had received an SCN under Section 73 on 30.09.2023 covering five grounds including TRAN-1 credit, ITC on imports, and Rule 42/43 reversals. That SCN was dropped on 30.12.2023. A fresh SCN under Section 74 (alleging fraud/wilful misstatement/suppression) was issued on 03.08.2024. HCL Infotech challenged it in a previous writ petition. The Allahabad HC quashed it on 27.09.2024, finding that the Section 74 SCN did not contain the basic ingredient of a specific allegation of fraud, wilful misstatement or suppression — without which the Section 74 jurisdictional threshold is not crossed. However, the court expressly left it open to the Revenue to issue a fresh Section 74 SCN if the basic ingredients were found to exist.
The fresh SCN dated 22.07.2026 — the subject of this petition — did this time contain allegations of fraud and suppression. But paragraph 3(ग) of the SCN went further. In Hindi, it levelled a formal allegation that HCL Infotech had "deliberately misled" the Allahabad High Court in the 2024 writ proceedings by using the dropping of the Section 73 SCN as a "shield" and making a "wilful mis-statement" that the earlier TRAN-1 proceedings had covered the entire pan-India claim, when in fact those proceedings were limited to the UP component. The Division Bench found this paragraph "clearly out of line" — not only because such allegations are not a required ingredient of an SCN under Section 74, but because they disclosed actual prejudice in the officer, born of the fact that the petitioner had successfully obtained relief against him in a previous writ petition. An officer who begins an adjudication with a formally recorded conviction that the petitioner has misled the High Court cannot be expected to bring the neutrality that a quasi-judicial proceeding demands.
On the jurisdictional and limitation contentions, the court rejected all four arguments raised by HCL Infotech: the argument that the second Section 74 SCN was time-barred; the argument that the writ court's earlier findings precluded a fresh SCN; the argument that the earlier Section 73 SCN being dropped barred a fresh Section 74 SCN on the same grounds; and the late submission that paragraph 3(ग) reflected wilful misstatement of facts. All four were analysed and rejected — the writ court's September 2024 order had granted positive liberty to the Revenue to issue a fresh Section 74 SCN, and Section 75(3)'s two-year limitation from the communication of a court direction applied even to this case of an SCN (not merely a final order). For the Revenue, the only casualty of this litigation is the disqualification of the particular adjudicating officer — the matter is remitted for fresh SCN issuance by a different officer, to be assigned by the Additional Commissioner, and all proceedings must conclude by 31.12.2026.
-2026-juristway.com-2165-HC(Allahabad)-GST | High Court of Allahabad | 06.08.2026