HC | Sec 74 Proceedings Valid Despite Sec 61 Proceedings Being Dropped

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  • Last Updated on 4 August, 2025

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Section 74 CGST Act Section 61 CGST Fraudulent ITC GST scrutiny

Case Details: Amit Agarwal vs. Assistant Commissioner, CGST & CX - [2025] 176 taxmann.com 942 (Calcutta)

Judiciary and Counsel Details

  • Raja Basu Chowdhury, J.
  • Vinay Shraff, Dev Agarwal and Ms. S. Poddar for the Petitioner.
  • Vipul Kundalia, Sr. Adv., Tapan Bhanja and Anindya Kanan for the Respondent.

Fact of the Case

The petitioner, a registered person under the CGST Act, was subjected to scrutiny of returns under Section 61 of the CGST Act, which culminated in the proceedings being dropped by the jurisdictional officer based on the petitioner’s written response. Thereafter, proceedings were initiated under Section 74 of the CGST Act for the same period, on the ground that fraudulent availment of ITC had been detected. The petitioner challenged the validity of the notice under Section 74, contending that the dropping of proceedings under Section 61(3) without consequential action precluded any fresh proceedings for the same period. It was argued that the officer, having failed to proceed under Section 61, was barred from invoking Section 74 in the absence of new material. The matter was accordingly placed before the High Court of Calcutta.

HC Held

The Calcutta High Court held that Section 74 deals specifically with cases involving fraud, willful misstatement, or suppression, and that its invocation is not contingent upon the outcome of proceedings under Section 61. The Court observed that the proper officer may not be in a position to identify fraudulent conduct at the stage of scrutiny, and such detection may occur only upon further investigation. It was held that the legislature, in its wisdom, incorporated Section 74 precisely for this purpose. A specific case of fraud having been made out in the show cause notice based on investigation findings, the Court ruled that initiation of proceedings under Section 74 was justified. It was further clarified that while closure of scrutiny under Section 61(3) may be a bar for action under Section 73, it is not an impediment to proceedings under Section 74. Accordingly, the writ petition was dismissed.

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List Of Cases Referred To

 

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied