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M/s Tata Steel Limited v. Union of India Through the Secretary, Ministry of Finance

Civil Appeal · 2026 INSC 920Decided 25 Aug 2026
Civil Appeal (arising out of SLP(C) No. 16859 of 2026)
Justice J.B. Pardiwala · Justice K. Vinod Chandran

Background

Tata Steel received a Show Cause Notice covering financial years 2018-19 to 2020-21, based on a Comptroller and Auditor General audit objection about a mismatch in input tax credit and short payment of tax. The notice invoked Section 74 of the CGST Act, which allows tax authorities a longer five-year window (instead of the normal three years under Section 73) but only where fraud, wilful misstatement, or suppression of facts is alleged. Notably, the department's own Assessing Officer had initially placed the matter in the "call book" (i.e., kept it in abeyance) and was contesting the underlying audit objection before Parliament's Public Accounts Committee, suggesting the department itself was not convinced of any wrongdoing, yet later revived the notice as a "protective" measure purely because the normal three-year limitation period was about to expire.

Decision Breakdown

The Supreme Court held that invoking Section 74's extended limitation requires more than reciting the words "fraud" or "suppression" in a notice: the notice itself must set out the foundational facts that actually support such an allegation, and mere formulaic language does not show real application of mind by the Assessing Officer. Calculating the actual limitation timeline (accounting for GST return-filing extensions and the Supreme Court's own COVID-era limitation-extension order), the Court found the notice was issued after the ordinary three-year limitation had already expired, and the department's attempt to fall back on the five-year fraud-based limitation failed because the notice contained no real factual basis for the suppression allegation: just a bland, unsupported assertion. The Court also rejected the department's argument that a "protective" notice could be issued merely to beat the clock, noting this concept is alien to the GST regime. The Show Cause Notice and the resulting Order-in-Original were both set aside, though the Court left the door open for the department to issue a fresh, properly grounded Section 74 notice before 28 February 2027, since some of the extended period remained available.

Lesson Learnt

Tax authorities cannot use the extended fraud-based limitation period as a fallback simply because the ordinary limitation period has run out: a notice alleging fraud or suppression must actually spell out the specific facts supporting that serious allegation, not just recite the statutory buzzwords.

Official source (sci.gov.in)View Judgment (PDF)

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