No Section 74(1) Notice, No Valid Demand: The Position on DRC-07 and Investigation Material

This article explains that a demand under Section 74 of the CGST Act, 2017 for periods up to FY 2023-24 requires a statutory show cause notice, and that investigation, summons, statements, correspondence, a hearing or Form GST DRC-07 cannot stand in for it.

The point matters now because demands built on search or investigation material are sometimes confirmed by an order and a DRC-07 without a notice ever being served. A reported decision of the GSTAT Kolkata bench addresses the situation, and the same reasoning gives practitioners a structured way of testing any Section 74 order.

The reported decision

The decision is Partha Tribedi, Proprietor of M/s Tribedi Enterprise v. Vivek Ranjan, Assistant Commissioner, Bureau of Investigation, North Bengal, Raiganj, reported as 2026-VIL-111-GSTAT-KOL (GSTAT Kolkata), with the decision date reported as 22 September 2026. This article relies on the reported material and has not verified it against the full order.

As reported, proceedings cannot be sustained where no Section 74(1) notice was served before the demand was determined. The notice is the foundation of adjudication. It is not a formality that can be reconstructed afterwards.

Q1. What does Section 74(1) require?

Section 74 applies to tax not paid, short paid or erroneously refunded, or ITC wrongly availed or utilised, by reason of fraud, wilful misstatement or suppression of facts to evade tax. Under Section 74(1) the proper officer shall serve notice on the person chargeable, requiring that person to show cause why the specified amount, with interest and penalty, should not be paid. Issue and service are both mandatory.

Sections 73 and 74 govern determinations for periods up to FY 2023-24. From FY 2024-25 the framework is Section 74A.

Q2. What does a proper notice contain?

A notice ordinarily states: