GST Demand Quashed as Final Order Covered Different Periods Than the SCN.

Issue

Whether a final adjudication order is legally valid if it determines a tax liability for a period that is different from the tax period specified in the original Show Cause Notice (SCN).

Facts

The GST department issued a Show Cause Notice (SCN) in FORM DRC-01 to the assessee, proposing a demand under Section 74 (fraud).
The SCN clearly specified the tax period in question as 2020-21.
However, the department passed a final order in FORM DRC-07 that was based on a statement of ITC for 2019-20 and included tax, interest, and penalty calculations for the period from 2018-19.
The assessee challenged this final order, pointing out the clear mismatch of periods between the notice and the order.

Decision

The High Court set aside (quashed) the impugned final order.
It found that the periods stated in the SCN and the final order did not match, which is a fatal procedural flaw.
The matter was remanded back to the adjudicating authority with a direction to proceed further with the original SCN for the 2020-21 period and pass a fresh, correct adjudication order.

Key Takeaways

Order Must Adhere to SCN: The final order cannot travel beyond the scope of the Show Cause Notice. This includes the specific tax period, the legal grounds, and the proposed amount.
Mismatch Vitiates Order: An order that determines a demand for a tax period that was not mentioned in the SCN is a clear violation of the principles of natural justice, as the taxpayer was never put on notice for that period.
Fundamental Defect: This is not a minor clerical error but a fundamental jurisdictional defect that renders the entire order legally invalid.
Remedy is a Fresh Order: The correct legal remedy is to quash the invalid order and direct the authority to pass a new, correct order that strictly conforms to the original SCN.

HIGH COURT OF ORISSA

Sai Sitaram Construction

State Tax Officer^*

HARISH TANDON, CJ.
and MURAHARI SRI RAMAN, J.

W.P. (C) No.25270 of 2025

OCTOBER 30, 2025

Ms. Kajal Sahoo, Adv. for the Petitioner. Sunil Mishra, Standing Counsel and Sourav Tibrewal, Addl. Standing Counsel for the Respondent.

ORDER

1. Questioning the correctness of order dated 23^rd July, 2025 in Form GST DRC-07 (Annexure-4) passed by the State Tax Officer, Ganjam Circle-1, Berhampur-opposite party under Section 74 of the Central Goods and Services Tax Act, 2017/the Odisha Goods and Services Tax Act, 2017 (collectively, “GST Act”) with direction to deposit an amount to the tune of Rs.17,89,972/- (Tax of Rs.5,75,480/- + Interest of Rs.6,39,012/- + Penalty of Rs.5,75,480/-) pertaining to tax periods from April, 2020 to March, 2021, the present writ petition has been filed under the provisions of Articles 226 & 227 of the Constitution of India.

2. Ms. Kajal Sahoo, learned counsel appearing for the petitioner referring to the show-cause notice dated 16^th May, 2025 issued in Form GST DRC-01 submitted that whereas such notice was issued for adjudication under Section 74 of the GST Act related to the tax periods from April, 2020 to March, 2021, the final order dated 23^rd July, 2025 appears to have been passed taking into statement of ITC for the year 2019-20 and calculation of tax, interest and penalty ex facie is made for the period from 2018-19 and, accordingly, a demand to the tune of Rs.17,89,972/- has been raised as is evident from the table appended to Order dated 23.07.2025.

2.1. She has vehemently contended that the summary of order passed in GST DRC-07 dated 23^rd July, 2025 though reflected the tax periods involved is from April, 2020 to March, 2021, the figures of tax, interest and penalty mentioned therein does not commensurate with the reasoned order passed and enclosed thereto. Such order manifests that the demand comprising figures arrived at relate to the period 2018-19. Therefore, she submits that the entire adjudication order along with show-cause notice is liable to be quashed, being non-application of mind, bereft of cogent material fact and mechanical appreciation of evidence on record.

3. On an earlier occasion, when the matter was listed, this Court passed an order dated 24^th September, 2025 stating the aforesaid facts and on the request of the learned Standing Counsel appearing for the CT & GST Organisation allowed accommodation to clarify the actual position. Today, when the matter is taken up, Mr. Sunil Mishra, learned Standing Counsel instead of filing any response, conceded to the submissions advanced by the learned counsel appearing for the petitioner that the figures shown in the adjudication order dated 23^rd July, 2025 ex facie depicts incorrect figures, and the calculation requires to be redone taking into figures relating to the period for which the show-cause notice dated 16^th May, 2025 was issued.

4. Heard learned counsel appearing for the petitioner and learned Standing Counsel appearing for the Department-opposite party.

5. Faced with aforesaid situation, having perused the record this Court is satisfied that the periods stated in the show cause notice and the order impugned does not match. Therefore, indulgence in the matter is warranted. This Court, hence, sets aside the order dated 23^rd July, 2025 and remit the matter to the State Tax Officer, Ganjam Circle-I, Ganjam, Berhampur to proceed further with the show-cause notice dated 16^th May, 2025 issued under Section 74 of the GST Act and pass adjudication order afresh after affording the petitioner opportunity of hearing. It is clarified that this Court has not expressed any opinion on the merits of the adjudication. The petitioner is at liberty to raise objections as is available to it under law and participate in the proceeding. The authority concerned is free to pass reasoned order thereon without being influenced by any of the observation made supra. The entire exercise shall be completed within a period of two months from date.

6. With the aforesaid observation and direction, the writ petition is disposed of. Interlocutory Application(s) pending, if any, shall also stand disposed of.