Supreme Court of India· 25 August 2026

Is a protective demand permitted under the GST law where the limitation period is coming to a close?

M/s Tata Steel Limited v. Union of India through the Secretary Ministry of Finance and Ors

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

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Answer

No. A fresh notice reviving an earlier notice and proposing a protective demand because the proceedings are time bound under the GST law cannot be sustained, there being no such measure of protective assessment statutorily permitted under the GST Act.

Headnote

Central Goods and Services Tax Act, 2017 — s.73 — s.74 — Show Cause Notice — Extended period of limitation — Suppression of facts — Foundational facts — Protective demand — Central Goods and Services Tax Act, 2017 — s.74 — Extended period — Foundational facts in the notice — Held: 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. (¶14) Central Goods and Services Tax Act, 2017 — s.73 — s.74 — Satisfaction of the Assessing Officer — Held further: Proceedings under Section 73/74 can be initiated only on the satisfaction of the Assessing Officer; even if observations are made on audit, the Assessing Officer should enter his satisfaction before a notice is issued. (¶11, 13) Central Goods and Services Tax Act, 2017 — s.73(2) — s.73(10) — Limitation runs to the order — Held further: The limitation under Section 73(10) is to issue the order under Section 73(9) and not to issue a notice, sub-section (2) of Section 73 providing for a notice at least three months before that time limit. (¶12) Central Goods and Services Tax Act, 2017 — Protective demand — Not statutorily permitted — Held further: A fresh notice reviving an earlier notice and proposing a protective demand cannot be sustained, there being no such measure of protective assessment statutorily permitted under the GST Act. Appeal allowed with liberty. (¶10, 15)

In the Court's own words

Paragraph 2The appellant is concerned with the Show Cause Notice (SCN) issued for three financial years, viz: 2018-2019 to 2020- 2021, purportedly in pursuance of an objection raised on an audit by the office of the Comptroller and Auditor General of India. The SCN is termed to be one under Section 74 of the Central Goods and Services Tax Act, 2017 (the CGST Act). The appellant’s contention is that there is no allegation of fraud, willful misstatement or suppression of facts, bereft of which there can be no invocation of Section 74, where there is an extended period of five years, as distinguished from a period of three years available under Section 73. It is also contended that the Assessing Officer itself was not convinced about the audit objection and he had kept it under ‘call book’, which as per the departmental parlance means ‘keeping in abeyance’. However, again a notice was issued because the limitation period was coming to a close, purportedly as a protective measure, which concept is alien to the GST regime.

Paragraph 10Later, a fresh notice was issued on 01.07.2025, reviving the earlier notice and proposing a protective demand since the proceedings are time bound under the GST law, there being no such measure of protective assessment statutorily permitted under the GST Act.

Acts & Sections

s.74 Central Goods and Services Tax Act, 2017s.73 Central Goods and Services Tax Act, 2017s.44 Central Goods and Services Tax Act, 2017Rule 80 Goods & Service Tax Rules, 2017

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Also decided in this judgment

Can a Section 74 notice under the CGST Act stand where the allegation of suppression lacks foundational facts?Must the Assessing Officer enter his own satisfaction before a CGST Act notice issues on audit objections?Under the CGST Act, do the three years in Section 73(10) run to the notice or the order?

Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Supreme Court of India. Corrections