Comprehensive Legal Defense Against Invocation of Section 74 of the CGST Act, 2017: Analyzing ‘Willful Suppression’ in the Context of Insolvency and Non-Realization of Professional Fees

Executive Summary

The present legal analysis evaluates the defense strategy for a Writ Petition challenging the invocation of Section 74 of the CGST Act on allegations of willful suppression against an architect (the “Petitioner”). The factual matrix involves the supply of non-contingent professional services for which the architect received no consideration, leading to the initiation of insolvency proceedings under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) against the corporate debtor. The core allegation by the Revenue Department is that the Petitioner engaged in willful suppression of facts to evade tax, thereby justifying the invocation of the extended period of limitation and the imposition of a 100% penalty.

This report posits that the invocation of Section 74 of the CGST Act for alleged willful suppression is legally unsustainable and constitutes a jurisdictional error. The non-payment of GST, arising directly from the non-realisation of professional fees and the subsequent legal action taken by the architect to recover said dues, constitutes a bona fide inability to perform a statutory obligation due to external commercial factors, rather than a fraudulent intent to evade tax.

The defense is constructed on four primary legal pillars:

Absence of Mens Rea: Jurisprudential definitions of “suppression” established by the Supreme Court in Uniworth Textiles, Pushpam Pharmaceuticals, and Anand Nishikawa require a positive, deliberate act of concealment. The Petitioner’s initiation of public insolvency proceedings under Section 9 of the IBC is diametrically opposed to the concept of suppression, serving as irrefutable evidence of transparency and diligence.
The Doctrine of Lex Non Cogit Ad Impossibilia: The law does not compel the impossible. The financial impossibility of discharging tax liability on unrealized income, exacerbated by the structural lacuna in the GST framework regarding “bad debt” relief and the strict time limits for Credit Notes under Section 34, renders strict compliance impossible.
The “Clean Slate” Theory: The Supreme Court’s ruling in Ghanashyam Mishra establishes that approved resolution plans extinguish past liabilities of the corporate debtor. Penalizing the operational creditor (Petitioner) for the extinguished liability of the debtor amounts to unjust enrichment by the State and violates Article 14 of the Constitution.
Jurisdictional Overreach: The conditions for invoking Section 74—specifically “fraud” or “willful misstatement”—are not met. Consequently, the proceedings should, at best, fall under Section 73, which may be time-barred, or be quashed entirely due to the impossibility of performance.

This report provides an exhaustive examination of these grounds, integrating statutory analysis, binding judicial precedents, and comparative global tax standards to formulate a robust defense for the Writ Petition.

1. The Statutory Architecture of Willful Suppression: Section 74 CGST Act and the Requirement of Mens Rea

The central dispute in the proposed Writ Petition concerns the legitimacy of the Revenue’s invocation of Section 74 of the CGST Act, which is predicated on allegations of willful suppression, requiring a strict examination of the statutory language and the high threshold of mens rea necessary to sustain such a charge.

1.1 Statutory Distinction: Section 73 vs. Section 74

The CGST Act creates a dichotomy between non-payment of tax due to bona fide error (Section 73) and non-payment due to malafide intent (Section 74). This distinction is not merely procedural but substantive, determining the limitation period, the penalty quantum, and the burden of proof.

Section 73 applies to cases where tax has not been paid or short paid for any reason other than fraud, willful misstatement, or suppression of facts. It envisions scenarios of inadvertent error, interpretation differences, or simple negligence.

Section 74, conversely, is a punitive provision. It applies where tax evasion is alleged due to fraud, willful misstatement, or willful suppression under Section 74 of the CGST Act, as illustrated below:

Fraud: Active deception.
Willful Misstatement: Deliberately making false statements.
Suppression of Facts: Intentionally withholding information.

The limitation period for issuing a Show Cause Notice (SCN) under Section 74 is five years from the due date of the annual return, whereas Section 73 limits this period to three years.[1] The penalty under Section 74 is 100% of the tax due, compared to 10% under Section 73.

1.2 Defining “Willful Suppression”

Explanation 2 to 74 of the CGST Act defines “willful suppression” as the “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”. [2]

However, this statutory definition is not absolute. It acts as a deeming fiction that must be read in consonance with the principles of natural justice and the requirement of intent. The mere act of “non-declaration” does not automatically equate to “suppression” under Section 74 unless it is accompanied by the intent to evade.

The Supreme Court of India, in the landmark judgment of Uniworth Textiles Ltd. v. Commissioner of Central Excise, adjudicated on the analogous provision in the Customs Act (Section 28). The Court observed that “mere non-payment of duties is not equivalent to collusion or willful misstatement or suppression of facts”. [3] The Court reasoned that if every non-payment were treated as suppression, the distinction between the ordinary limitation period and the extended limitation period would be obliterated, rendering the shorter limitation period redundant.5

For the Petitioner, this is the first line of defense: The non-payment of GST was not a clandestine act. The Petitioner did not divert funds or hide the transaction. The transaction was likely recorded in the books of accounts, and potentially even declared in GSTR-1 (as an invoice issued), but the tax was not paid in GSTR-3B due to the non-receipt of funds. This constitutes “mere non-payment” or “default,” which falls squarely under Section 73 (or is excusable), but certainly does not meet the high threshold of Section 74.

1.3 The Necessity of a “Positive Act”

Judicial interpretation has consistently held that for “suppression” to be invoked, there must be a positive act betraying a negative intention. Passive omission does not suffice.

In Pushpam Pharmaceuticals Company v. Collector of Central Excise, [5] the Supreme Court interpreted the proviso to Section 11A of the Central Excise Act (pari materia with Section 74 GST). The Court held:

“In taxation, it (‘suppression of facts’) can have only one meaning that the correct information was not disclosed deliberately to escape payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression.” [5]

This “Positive Act” doctrine was reinforced in Anand Nishikawa Co. Ltd. v. Commissioner of Central Excise, where the Supreme Court held that “suppression of facts” refers to the intentional withholding or deliberate misrepresentation of information. Mere failure to disclose details does not amount to suppression unless there is clear intent to deceive.8

Application to the Architect:

The Petitioner’s conduct must be analyzed through this lens. Did the Petitioner engage in a “positive act” to hide the supply?

Fact: The Petitioner issued an invoice (presumably).
Fact: The Petitioner recognized the revenue in books (accrual basis).
Fact: The Petitioner initiated legal proceedings (Section 9 IBC) to recover the amount.

These are positive acts of compliance and recovery, not of evasion. The failure to pay the tax was a passive consequence of the failure to receive payment. Unlike a tax evader who keeps transactions “off the books,” the architect has put the transaction “on the record” in a court of law (NCLT). Therefore, the essential ingredient of a “positive act of suppression” is absent.

1.4 Burden of Proof

In proceedings under Section 74, the burden of proving the mens rea lies heavily on the Revenue. The Madhya Pradesh High Court has recently held that an SCN issued under Section 74 is liable to be quashed if it is bereft of material particulars regarding allegations of fraud.[8] The Revenue cannot simply allege suppression; they must prove that the architect intended to defraud the exchequer.

The following table synthesizes the judicial differentiation between “Non-Payment” and “Suppression” which forms the bedrock of the Writ Petition’s maintainability:

Legal Element	Section 73 (Bona Fide Default)	Section 74 (Malafide Suppression)	Authority
Nature of Act	Inadvertent error, financial hardship, or interpretational dispute.	Deliberate fraud, collusion, or intentional concealment.	Uniworth Textiles 5
Mental State (Mens Rea)	Not required; strict liability for the tax amount only.	Mandatory prerequisite; requires “intent to evade.”	Anand Nishikawa 8
Limitation Period	3 years from due date of annual return.	5 years from due date of annual return.	Section 74 CGST Act [1]
Penalty	10% of tax or ₹10,000 (whichever is higher).	100% of tax amount.	Section 74 CGST Act
Burden of Proof	Revenue proves short payment.	Revenue must prove intent to evade.	Cosmic Dye Chemical [9]
Applicability to Architect	Applicable if invoices were declared but tax unpaid due to lack of funds.	Applicable ONLY if invoices were hidden/destroyed to hide turnover.	Pushpam Pharma [6]

2. The Factual Matrix: Architect Services and the Insolvency Trigger

To defend the Writ Petition effectively, the legal arguments must be deeply rooted in the specific factual context of architectural services and the insolvency proceedings. The nature of the supply and the subsequent legal actions taken by the Petitioner are not merely background details; they are exculpatory evidence.

2.1 Continuous Supply of Services and Time of Supply

Architectural services often fall under the category of “Continuous Supply of Services” as defined in Section 2(33) of the CGST Act, provided the contract exceeds three months and has periodic payment obligations.[10]

Under Section 31(4) of the CGST Act, the invoice for continuous supply must be issued:

(a) On or before the due date of payment, if ascertainable from the contract.
(b) Before or at the time of receipt of payment, if the due date is not ascertainable.
(c) On or before the completion of an event, if payment is linked to the completion of that event.[11]

The Trap of Accrual Taxation:

In standard architectural contracts, payments are often linked to milestones (e.g., “Submission of Concept Design,” “Municipal Approval,” “Tender Drawings”).

Scenario: The architect completes the “Municipal Approval” stage.
Legal Consequence: Under Section 31(4)(c), the invoice must be issued because the event is complete.
Tax Consequence: Under Section 13(2), the Time of Supply is the date of invoice issuance. The liability to pay GST crystallizes immediately.[12]
Commercial Reality: The client (Corporate Debtor) delays payment, disputes the approval, or simply runs out of cash.

The Petitioner, following the law, issues the invoice upon completion of the milestone. This act triggers the GST liability. However, the funds never arrive. The Petitioner is now legally obligated to pay 18% of the invoice value to the government from their own pocket. When the Petitioner fails to do so—because the client has defaulted—the Revenue labels this as “suppression.”

This factual sequence demonstrates that the “default” is forced by the statutory framework’s reliance on accrual/invoice-based taxation, which does not account for payment default. It is not a suppression of the transaction, but a failure to discharge the liability due to liquidity crisis caused by the recipient.

2.2 Section 9 IBC: The Ultimate Proof of Bona Fides

The Petitioner initiated insolvency proceedings under Section 9 of the IBC against the corporate debtor. This legal step is the single most important piece of evidence in the Petitioner’s defense against Section 74.

The Process of Section 9 Filing:

Demand Notice (Section 8): The Operational Creditor must deliver a demand notice for the unpaid operational debt.
Application to Adjudicating Authority (Section 9): If the demand is not met within 10 days, the application is filed with the NCLT.
Public Announcement (Section 13): Once admitted, a public announcement is made inviting claims.

Implications for “Suppression”:

Public Record: A Section 9 petition is a public judicial record. One cannot “suppress” a transaction while simultaneously suing on it in open court.
Affirmation of Debt: The filing confirms that the Petitioner considers the amount (including GST) as “due and payable.” It negates any suggestion that the Petitioner agreed to an off-the-books settlement or waived the amount to evade tax.
Intent to Recover: The legal cost and effort of filing an IBC petition demonstrate a desperate intent to recover the dues. If the Petitioner recovers the dues, they would presumably pay the tax. The failure to pay is thus contingent on the failure to recover, not on an intent to evade.

In Uniworth Textiles, the Supreme Court noted that when an assessee writes to the department or seeks clarification, it shows a bona fide mind.[4] Similarly, seeking judicial intervention to recover dues (which include the tax component) is the highest form of bona fide conduct.

2.3 The “Clean Slate” Theory and Extinguishment of Debt

The IBC proceedings introduce a complex conflict with GST recovery. The Supreme Court in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. established the “Clean Slate Theory.” The Court held that once a Resolution Plan is approved by the Adjudicating Authority, all claims that are not part of the Resolution Plan stand extinguished.[13]

The Conundrum:

The Petitioner (Operational Creditor) submits a claim for ₹1 Crore + ₹18 Lakhs GST.
The Resolution Plan is approved with a 90% haircut. The Petitioner receives only ₹11.8 Lakhs total.
The original GST liability was ₹18 Lakhs.
Question: Is the Petitioner still liable to pay the full ₹18 Lakhs to the government, even though the underlying debt has been legally extinguished by the Supreme Court-mandated process?

If the Revenue invokes Section 74 to demand the full ₹18 Lakhs (plus penalty) on a debt that the law itself (IBC) has declared settled/extinguished, it creates an absurdity. The Revenue is effectively demanding a share of a “value” that no longer exists. While Ghanashyam Mishra primarily protects the Corporate Debtor [14], the Petitioner can argue that the “extinguishment” of the debt renders the collection of tax on the original value “arbitrary” and “impossible.”

3. Jurisprudential Analysis of “Willful Suppression”

To withstand the scrutiny of the High Court, the Writ Petition must be fortified with binding precedents that specifically interpret willful suppression under Section 74 of the CGST Act in the context of tax statutes. The courts have established a rigorous standard for the Revenue to meet before Section 74 can be applied.

3.1 The “Positive Act” Requirement: Pushpam Pharmaceuticals

In Pushpam Pharmaceuticals Company v. Collector of Central Excise 6, the Supreme Court dealt with the proviso to Section 11A of the Central Excise Act. The Court held:

“Since ‘suppression of facts’ has been used in the company of strong words such as fraud, collusion or willful default, suppression of facts must be deliberate and with an intent to escape payment of duty.”

The Court distinguished between “omission” and “suppression.” Omission is passive; suppression is active. For an architect who has simply failed to file a return or pay tax because of a lack of funds, this is an omission. It becomes suppression only if they took active steps to hide the transaction (e.g., falsifying invoices, creating parallel books).

Defense Argument: The Petitioner represents a case of “omission to pay due to financial constraint,” which is categorically distinct from “suppression to evade.”

3.2 The “Deliberate Withholding” Test: Anand Nishikawa

In Anand Nishikawa Co. Ltd. v. Commissioner of Central Excise 8, the Supreme Court reinforced that “mere failure to declare does not amount to willful suppression.” The Court required a “deliberate withholding” of information.

The Writ Petition should highlight that the initiation of insolvency proceedings negates “deliberate withholding.” The Petitioner is literally shouting from the rooftops (NCLT) that the debt exists and is unpaid. This public declaration is incompatible with the secrecy required for suppression.

3.3 The “Intent to Evade” Test: Cosmic Dye Chemical

In Cosmic Dye Chemical v. Collector of Central Excise [9], the Supreme Court held that the existence of “intent to evade duty” is a sine qua non (indispensable condition) for invoking the extended limitation period. The Court ruled that it is not enough for the facts to be suppressed; the suppression must be motivated by the intent to evade.

Defense Argument: The Petitioner’s motive is transparent—they filed for insolvency to recover the dues. A person intending to evade tax would avoid legal scrutiny. This shows that any non-payment was due to debtor insolvency, not willful suppression of facts under Section 74 CGST Act.

3.4 ***Uniworth Textiles*: The Burden on Revenue**

In Uniworth Textiles Ltd. v. CCE [3], the Court held that the burden of proving mala fides lies on the Revenue. The Revenue cannot merely assume suppression because the tax wasn’t paid. They must evince evidence of a “conscious or deliberate withholding.”

Defense Argument: The SCN likely relies solely on the fact of non-payment to allege suppression. Under Uniworth, this is insufficient. The SCN must be quashed for failing to provide specific evidence of the Petitioner’s deceptive intent.

4. The Insolvency and Bankruptcy Code (IBC) as a Shield

The interaction between the IBC and the CGST Act is a developing area of law. However, for the purpose of defending against Section 74, the IBC provides powerful arguments regarding the bona fides of the Petitioner and the legal impossibility of recovery.

4.1 The Moratorium (Section 14 IBC)

Upon the admission of a Section 9 petition, a moratorium is declared under Section 14 of the IBC. [15] This moratorium prohibits:

“The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority.”

While the moratorium technically protects the Corporate Debtor, it creates a legal disability for the Petitioner. The Petitioner is legally barred from recovering the debt (and the tax component) outside the IBC process.

Argument: The Petitioner is legally restrained by a Central Statute (IBC) from collecting the tax. Can another Central Statute (CGST Act) penalize the Petitioner for failing to collect/pay that very tax? This creates a statutory conflict where the Petitioner is caught in the middle. The failure to pay is thus a result of “obedience to the IBC process” rather than “evasion of GST.”

**4.2 The “Clean Slate” Doctrine (*Ghanashyam Mishra***)

The Ghanashyam Mishra judgment 15 finalized the principle that once a Resolution Plan is approved, the Corporate Debtor starts with a “clean slate.” The claims of the Operational Creditor (Petitioner) are settled according to the plan.

Impact on Section 74: If the tax demand pertains to an amount that has been “haircut” (written off) under the IBC, the Petitioner can argue that the taxable value itself has been modified by operation of law.
Case Law Support: In Ultra Tech Nathdwara Cement Ltd. v. Union of India [16], the Rajasthan High Court held that the GST department cannot raise demands for the period prior to the plan approval against the debtor. The defense here extends this logic: if the Department cannot recover from the Debtor, and the Petitioner could not recover from the Debtor, penalizing the Petitioner for the Debtor’s default violates equity.

5. The Doctrine of Lex Non Cogit Ad Impossibilia

A potent defense in the Writ Petition is the application of the legal maxim Lex non cogit ad impossibilia—”The law does not compel the doing of impossibilities”.[17]

5.1 Judicial Acceptance in Tax Matters

Indian Courts have repeatedly applied this maxim to relieve taxpayers from liability where compliance was impossible.

Meenu Trading Co. v. Government of NCT of Delhi [18]: The Delhi High Court held that a purchasing dealer cannot be denied ITC due to the selling dealer’s failure to deposit tax, as it is impossible for the purchaser to ensure the seller’s compliance.
Arise India Ltd. v. Commissioner of Trade & Taxes: The Court struck down provisions that made the purchaser strictly liable for the seller’s default, citing the doctrine of impossibility.

Application to the Architect:

It is “impossible” for the Architect to pay 18% GST on a project where 0% consideration has been received, especially when the project size is significant. If the GST liability exceeds the Architect’s net worth or liquid assets, compelling payment forces the Architect into insolvency. The law cannot be interpreted to destroy the taxpayer’s business for the default of another.

5.2 The Statutory Trap: Section 34 and Bad Debts

Unlike the Income Tax Act, which allows for “Bad Debts” to be written off as an expense, the CGST Act has no explicit provision for “Bad Debt Relief” once the time limit for Credit Notes has passed.

Section 34(2): A Credit Note must be issued by the 30th of November following the end of the financial year. [19]
Insolvency Timeline: IBC cases often take years to resolve. By the time the debt is confirmed as “bad” (e.g., liquidation or haircut), the time limit under Section 34 has long expired.

The “Impossibility” Argument: The Petitioner is trapped. They cannot issue a Credit Note because of the time bar. They cannot recover the money because of the IBC moratorium. They cannot pay the tax because they haven’t received the funds.

Invoking Section 74 (Fraud) in this scenario is not just incorrect; it is perverse. The Writ Petition should argue that the High Court, under Article 226, must intervene to prevent this “statutory impossibility” from being labeled as “fraud.”

6. Global Comparative Analysis & Constitutional Arguments

To bolster the argument that the Indian GST department’s stance is unreasonable, the Writ Petition can draw on global best practices and constitutional principles.

6.1 Global Best Practices on Bad Debts

Most modern VAT/GST regimes recognize that tax is a tax on consumption, and if the consideration is not paid, the tax should be relieved.

Australia: Division 21 of the A New Tax System (Goods and Services Tax) Act 1999 explicitly allows for “Bad Debt Adjustments.” If a debt is written off, the supplier can claim a decreasing adjustment (refund of GST paid).[20]
New Zealand: Section 26 of the Goods and Services Tax Act 1985 allows a deduction from output tax for bad debts written off.[21]
United Kingdom: The VAT Act 1994 allows for bad debt relief if the debt remains unpaid for six months.

The absence of such a provision in India (except via the time-limited Credit Note) creates a harsh anomaly. While the Court cannot legislate, it can interpret Section 74 strictly to ensure that this anomaly does not result in criminal-like penalties for civil misfortunes.

6.2 Unjust Enrichment by the State

The concept of GST is that the supplier collects tax from the recipient and deposits it with the government. The supplier is a pass-through agent.

If the supplier never collects the tax (due to recipient default), but the Government forces the supplier to pay it, the Government is enriching itself at the cost of the supplier’s capital, not the consumer’s consumption. This amounts to “Unjust Enrichment” by the State.

Argument: Penalizing the Petitioner under Section 74 for resisting this unjust enrichment is violative of Article 14 (Arbitrariness).

6.3 Article 19(1)(g): Right to Carry on Business

In Suncraft Energy Private Limited v. Assistant Commissioner [22], the Calcutta High Court (affirmed by the Supreme Court) held that the Department cannot reverse ITC from a buyer merely because the seller didn’t pay, without first exhausting recovery against the seller.

Reverse Logic: The same equitable principle applies here. The Department should ideally file a claim as an Operational Creditor in the IBC proceedings of the Corporate Debtor (the actual defaulter) rather than harassing the unpaid Architect. Forcing the Architect to pay tax on unpaid invoices destroys their right to carry on business under Article 19(1)(g).

7. Procedural Defenses and Alternative Remedies

Beyond the substantive arguments, the Writ Petition must address procedural bars such as the existence of alternative remedies.

7.1 Maintainability of Writ Petition (Article 226)

Normally, courts require petitioners to exhaust statutory appeals (Section 107). However, a Writ Petition is maintainable despite alternative remedies if:

Violation of Natural Justice: The SCN is issued without jurisdiction or in violation of natural justice.
No Jurisdiction: If the “jurisdictional fact” (willful suppression) is absent on the face of the record (due to the IBC filing), the officer lacks jurisdiction to invoke Section 74.
Tribunal Non-Constitution: As of the current date, the GST Appellate Tribunal is not fully functional in many states. This vacuum justifies approaching the High Court directly.

7.2 Challenge to Limitation (Section 73 vs. 74)

If the Court finds that there is no “willful suppression,” the demand falls back to Section 73.

Limitation Bar: Section 73 has a 3-year limitation period. If the invoices in question are older than 3 years (which is likely in IBC cases where disputes drag on), the demand becomes time-barred immediately upon the quashing of Section 74 applicability.
Strategic Goal: The primary goal is to knock out the “fraud” tag. Once Section 74 is removed, the limitation period of Section 73 often wipes out the majority of the demand.

8. Strategic Roadmap for the Writ Petition

Based on the research, the Writ Petition is structured to clearly set out the grounds challenging the invocation of Section 74 of the CGST Act and the prayers for quashing the notice, declaratory relief, and interim protection.

8.1 Grounds

Ground A: The Impugned SCN is without jurisdiction as the invocation of Section 74 is based on mere non-payment, which is contrary to the Supreme Court’s law in Uniworth Textiles and Anand Nishikawa.
Ground B: The Petitioner’s act of filing Section 9 IBC proceedings is evidence of a “Positive Act” of compliance/recovery, negating any “mens rea” or “willful suppression.”
Ground C: The demand is barred by the doctrine of Lex non cogit ad impossibilia as the recovery of the tax amount is legally barred by the IBC moratorium and practically impossible due to the debtor’s default.
Ground D: The “Clean Slate” theory under IBC extinguishes the underlying debt, rendering the tax demand on such extinguished debt arbitrary and violative of Article 14.
Ground E: The penalty of 100% is disproportionate and violative of Section 126 of the CGST Act, which mandates penalties to be commensurate with the breach.

8.2 Prayers

Issue a Writ of Certiorari quashing the Impugned Show Cause Notice issued under Section 74 as being illegal, arbitrary, and without jurisdiction.
Issue a Writ of Mandamus declaring that the non-payment of GST due to bona fide non-realization of professional fees, evidenced by the initiation of insolvency proceedings, does not constitute “willful suppression” under section 74 CGST Act.
Alternative Prayer: Direct the Respondent to adjudicate the matter under Section 73 (Normal Limitation), subject to the Petitioner’s right to challenge the same on grounds of impossibility.
Stay: Grant an interim stay on the proceedings and any coercive recovery actions pending the disposal of the Writ Petition.

9. Conclusion

The invocation of Section 74 of the CGST Act on allegations of willful suppression against an architect who has supplied services but received no payment, and who has proactively sought legal recourse under the IBC, is a classic example of the mechanical application of tax laws, ignoring the mandatory requirement of mens rea for fraud-based provisions.

By anchoring the defense in the Supreme Court’s rigorous definitions of “suppression” (Uniworth, Pushpam), leveraging the transparency evidenced by the Section 9 IBC filing, and invoking the doctrine of impossibility (Lex non cogit ad impossibilia), the Petitioner presents a compelling case. The State cannot demand a share of a pie that was never baked, nor can it label a victim of commercial insolvency as a tax evader. The Writ Petition, structured on these lines, stands a strong chance of succeeding in quashing the Section 74 proceedings and protecting the Petitioner from unjust penalties.

Table of Authorities

Authority	Citation	Relevance to Defense
Uniworth Textiles Ltd. v. CCE	3	Mere non-payment is not suppression; distinction between Sec 73/74.
Pushpam Pharmaceuticals v. CCE	5	Suppression requires a “positive act” to evade.
Anand Nishikawa Co. Ltd. v. CCE	7	“Deliberate withholding” of information is mandatory for suppression.
Cosmic Dye Chemical v. CCE	9	Intent to evade is a prerequisite for extended limitation.
Ghanashyam Mishra v. Edelweiss	13	Clean Slate Theory; extinguishment of past dues under IBC.
Meenu Trading Co. v. Gov. of NCT	18	Lex non cogit ad impossibilia applies to tax compliance.
Suncraft Energy Pvt. Ltd. v. Asst. Comm.	22	Recovery must first be exhausted against the defaulter; protects bona fide parties.
D.Y. Beathel Enterprises v. State Tax Officer	23	Unfair to penalize one party for the default of another without investigation.

References

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[3] Uniworth Textiles Ltd v. Commissioner Of Central Excise Raipur | CESTAT | Judgment | Law, accessed on January 18, 2026, https://www.casemine.com/judgement/in/574bdfaee561095bc6d36911

[4] 28(4) SC Case Uniworth vs Commissioner | PDF – Scribd, accessed on January 18, 2026, https://www.scribd.com/document/977264616/28-4-SC-Case-Uniworth-vs-Commissioner

[5] M/S. Uniworth Textiles Ltd vs Commnr. Of Central Excise, Raipur on 22 January, 2013, accessed on January 18, 2026, https://indiankanoon.org/docfragment/104312764/?big=3&formInput=suppression%20of%20facts

[6] Pushpam Pharmaceuticals Company vs Collector Of Central Excise, Bombay on 28 March, 1995 – Indian Kanoon, accessed on January 18, 2026, https://indiankanoon.org/doc/1073828/

[7] Rigorous Standards for ‘Suppression of Facts’ Under Section 11-A Established in Anand Nishikawa Co. Ltd. v. Commissioner Of Central Excise – CaseMine, accessed on January 18, 2026, https://www.casemine.com/commentary/in/rigorous-standards-for-‘suppression-of-facts’-under-section-11-a-established-in-anand-nishikawa-co.-ltd.-v.-commissioner-of-central-excise/view

[8] SC stays further proceedings as SCN under Section 74 finding it prima facie bereft of material particulars beyond mere figures | TaxTMI, accessed on January 18, 2026, https://www.taxtmi.com/article/detailed?id=15680

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[13] Clean slate doctrine and its effect on sub-judice disputes of debtors – Shardul Amarchand Mangaldas & Co, accessed on January 18, 2026, https://www.amsshardul.com/insight/clean-slate-doctrine-and-its-effect-on-sub-judice-disputes-of-debtors/

[14] Debt Detox: Clean Slate, New Fate? – Metalegal Advocates, accessed on January 18, 2026, https://www.metalegal.in/post/debt-detox-clean-slate-new-fate

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