Background
Intimation in DRC-01A and Show Cause Notice (SCN) were issued. The Petitioner failed to respond to both. Hence, ex parte demand order under Section 74 of the CGST Act was passed. The Petitioner approached the Madras High Court, challenging the invocation of Section 74 ibid.
Observations
[Order of the Hon'ble High Court of Madras, dated 08.06.2026, in WP nos. 2026, 2075, 2079, 2081, 2086 and 2092 of 2025]
According to Explanation 2 to Section 74 ibid:
For the purposes of this Act, the expression "suppression" shall mean non-declaration of facts or information which a taxable person is required to declare in the return, statement, report or any other document furnished under this Act or the rules made thereunder, or failure to furnish any information on being asked for, in writing, by the proper officer.
Since the Petitioner did not respond to the intimation and thereafter to the notice, the petitioner is guilty of suppression of facts, thereby justifying the invocation of the extended period of limitation.
Comments
On a prima facie reading, the observation may appear justified. However, a proper reading of the definition as laid supra brings the following points to fore:
- Suppression means non-declaration of facts or information required to be declared in the return, statement, report or any other document furnished under the GST law. Will reply to intimation / SCN tantamount to a return, statement or report? Certainly not. Then, will they be covered under the ambit of "any other document"? Perhaps not, by applying the principle of ejusdem generis.
- Suppression also means failure to furnish any information on being asked for, in writing, by the proper officer. If we discount the so-called SCNs which seek information from the assessee for want of time or lack of knowledge, it is trite that SCN cannot be used to seek information.
- While the term "suppression" is defined, most tend to overlook the suffix "to evade tax" attached to the said term under Section 74 ibid. That is, even if an assessee's act of not reporting certain facts or information in a return, etc. falls within the realm of "suppression" as defined in law, it must be done with an intent to evade tax. Thus, mere satisfaction of the term "suppression" is insufficient to invoke Section 74 ibid.
Therefore, it is difficult to fathom how not replying to DRC01A / SCN amounts to suppression. Interestingly, if SCN under Section 73 ibid is issued on a subject matter and the taxable person fails to respond, could that amount to "suppression"?
