Adjudication Order Imposing Penalty Beyond Show Cause Notice Proposal Invalid Under Section 75(7)
Issue
Whether an adjudication order passed under Section 73 of the CGST / UPGS Act, 2017 imposing a penalty is legally valid when the Show Cause Notice (SCN) proposed only the confirmation of tax without proposing any penalty.
Facts
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Tax Period: The matter pertains to the assessment period 2020-21.
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SCN Proposal: The tax authority issued a Show Cause Notice under Section 73 proposing the confirmation of tax demand only.
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Adjudication Order: The adjudicating authority passed an order confirming the proposed tax demand and additionally imposed a penalty that was never proposed in the SCN.
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Writ Challenge: The petitioner filed a writ petition challenging the order for lack of jurisdiction and breach of the statutory mandate under Section 75(7).
Decision
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Statutory Bar Enforced: The High Court held that Section 75(7) strictly prohibits tax authorities from confirming any demand or penalty in excess of what was specified in the SCN.
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Lack of Jurisdiction: Imposing a penalty beyond the scope of the SCN proposals constitutes a fundamental illegality and is completely without jurisdiction.
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Order Quashed & Remanded: The Court set aside the impugned adjudication order and remitted the matter back for fresh adjudication after giving the assessee a proper opportunity of being heard.
Key Takeaways
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Strict Adherence to Section 75(7): Adjudicating authorities cannot travel beyond the four corners of the SCN; any tax, interest, or penalty confirmed in excess of the notice proposal is void.
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Penalty Must Be Proposed: A penalty under GST cannot be levied automatically in the final order unless it was explicitly proposed with supporting grounds in the original SCN.
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Jurisdictional Boundary: Exceeding the claims made in a Show Cause Notice creates a jurisdictional defect that renders the resulting order unsustainable in law.
HIGH COURT OF ALLAHABAD
Svas Lifesciences (P.) Ltd.
v.
State of U.P.
Saumitra Dayal Singh and Swarupama Chaturvedi, JJ.
WRIT TAX No. 3478 of 2026
AUGUST 17, 2026
Ajay Kumar Yadav, Ayush Kumar Mishra and Manoj Kumar Singh for the Petitioner.
ORDER
1. Heard Sri Ayush Kumar Mishra, learned counsel for the petitioner and Sri Ankur Agarwal, learned counsel for the UPGST authorities.
2. Upon hearing and perusal of the record, it cannot be disputed that the impugned Adjudication Order dated 13.02.2025 has been passed in gross violation of the mandatory statutory provisions contained under Section 75(7) of the UPGST Act, 2017 and the Central GST Act, 2017. Thus, the show cause notice dated 08.11.2024 proposed to confirm tax demand of Rs. 39,557.159/-. Against that vide Adjudication Order dated 13.02.2025 passed by the respondent no. 2 under Section 73 of the Act for the Financial Year 2020-21, tax demand of Rs. 39,557.159/- and penalty of Rs. 40,000/- has been confirmed.
3. In view of the fact that the provision of Section 75(7) of the Act is mandatory, clearly the Adjudication Order passed confirming the demand far in excess of the demand proposed is without jurisdiction.
4. In view of the above, fundamental illegality made out in face of the record, no useful purpose may be served in keeping the present writ petition pending or calling for counter affidavit at this stage. Once the legislature has forbid the adjudicating authority from confirming any demand in excess of that proposed, it may never became open to the adjudicating authority to confirm the demand in excess of that proposed.
5. Accordingly, the the impugned Adjudication Order dated 13.02.2025 is set aside. The matter is remitted to the respondent no. 2 to pass a fresh order, after giving due opportunity of hearing to the petitioner, as expeditiously as possible, preferably within a period of three months from today.
6. The petitioner undertakes not to take any undue or long adjournments.
7. Accordingly, the writ petition is disposed of.