M.S. Ramachandra Rao, CJ.

1. In this Writ Petition the petitioner, who is an assessee under the Central Goods and Services Tax Act, 2017 [“the Act”, for short], has challenged orders dt.10.06.2024 and 10.09.2024 passed under Section 74 of the Act, and also consequential orders/notices dt.23.10.2024 and 06.12.2024 demanding GST, interest and penalty.

2. In the instant case, the third respondent had issued Form GST DRC-01A intimation under Section 74(5) of the Act alleging that the petitioner did not make payment of tax against an E-Way bill generated for outward supply during the month of June, 2023 to August, 2024, and also did not file returns till that date.

3. Thereafter an order was passed on 06.12.2024 under Section 74 of the Act stating that petitioner did not make the payment within 30 days of the issuance of the notice.

4. This was followed up by a Summary of Order GST DRC-07 dt.06.12.2024.

5. Placing reliance on the judgment of the Supreme Court in M/s Tata Steel Limited v. Union of India through the Secretary, Ministry of Finance and Ors. (2026 SCC OnLine SC 1702), counsel for the petitioner contends that the show cause notice issued on 10.09.2024, does not indicate any foundational facts on the basis of which it could be inferred that there was a fraud/willful misrepresentation/suppression, and that even the said words themselves have not been used in the show cause notice.

6. These facts are not disputed by the respondents.

7. In M/s Tata Steel Limited (1 supra), it has been held as under:

                  “11. At the outset we have to notice that the proceedings under Section 73/74 can be initiated only on the satisfaction of the Assessing Officer. Even if observations/objections are made on audit, the Assessing Officer should enter his satisfaction before a notice is issued. Insofar as a notice under Section 74, the satisfaction should be not only of mismatch of ITC and short payment of tax having occurred, as is alleged in this case, the Officer should be satisfied that either fraud/willful misrepresentation/suppression had led to such mismatch or short payment of tax.

                  12. We are unable to countenance the argument of the learned ASG that Explanation 2 to Section 74 applies, since even according to him it stood omitted with effect from 01.11.2024. Equally fallacious is the argument that the proceedings were initiated prior to the expiry of limitation under Section 73. The limitation under Section 73 (10) is also to issue the order under Section 73 (9) and not to issue a notice and sub-section (2) of Section 73 provides for a notice, at least three months before the time limit under Section 73 (10).

                  13. The fact that the Department had taken up the objections on audit with the Public Accounts Committee itself indicates that there was no satisfaction at the end of the Department, meaning the Assessing Officer; as to the mismatch or the short fall of payment of tax having occurred, not to say anything about the suppression alleged. Further, but for a bland statement of availing of ITC for the three years ‘without documentary evidence and suppress the facts’ (sic), the SCN did not contain any foundational facts to validate such allegation of suppression.

                  14. It is not mere lip service to the provisions that is intended when an extended limitation period is provided for recovering an excess benefit availed, short payment or excess refund, from the assessee, especially when the allegation is of fraud/willful misrepresentation/suppression. The foundational facts which led to the inference arrived at of fraud/willful misrepresentation/ suppression should be evident from the notice itself. The mere employment of such words will not indicate an application of mind, upon which alone the satisfaction can be arrived at. The words are not to be mechanically recited in the notice to enable recovery outside the normal limitation provided under the statute.

                  15. In the facts of the above case, we do not find any such factual facts having been stated to make out a case of a deliberate device employed to evade tax or avail excess ITC, as coming out from the SCN. The bland statement made at some places of suppression of facts, merely to avail the extended period of limitation would barely suffice and puts to peril the notice under Section 74. The SCN on the above reasoning, cannot be sustained and the consequential Order-in-Original dated 26.12.2025 too is put in peril and both are set aside. However, the extended period of two years is not yet over, for all the three years since the three year limitation expired only on 28.02.2025 for all the subject financial years. It would be open for the Department, if it is thought fit, to initiate an appropriate proceeding under Section 74, but with the foundational facts, coming out from the notice itself and an order being passed before 28.02.2027.” [emphasis supplied]

8. In view of the above law laid down by the Supreme Court, and since in the instant case no foundational facts which led to the interference on the part of the respondents about alleged fraud/willful misrepresentation/ suppression necessitating the invocation of Section 74 are not mentioned, and in fact the very words “fraud/willful misrepresentation/suppression” themselves are not mentioned in the notice dt.10.09.2024, the said notice itself is invalid in law and any order passed on the basis of the said notice would be illegal, arbitrary and without jurisdiction.

9. Accordingly the Writ Petition is allowed and the impugned proceedings being orders dt.10.06.2024, 10.09.2024, show cause notice dt.23.10.2024 and consequential order dt.06.12.2024 are all set aside. No costs.

10. Pending application(s), if any, shall stand disposed of.