GST Order Confirming Demand Beyond Show Cause Notice

GST Order Confirming Demand Beyond Show Cause Notice Amounts Is Invalid And Remanded For Re-Adjudication

Issue

Whether an adjudication order confirming tax, interest, and penalty in excess of the proposed demand and beyond the grounds stated in the Show Cause Notice (SCN) is legally sustainable under Section 75 of the CGST/WBGST Act.

Facts

Period Involved: The dispute pertained to the period from April 2017 to March 2018 (FY 2017–18).
Initial Notice: The Revenue issued a Show Cause Notice proposing a tax demand at a specific lower figure.
Adjudication Order: The adjudicating officer passed an order confirming a significantly higher amount towards tax, interest, and penalty, exceeding the scope and figures outlined in the SCN.
Writ Jurisdiction: The assessee filed a writ petition challenging the order. Although the statutory time limit for seeking an alternative remedy had expired, the High Court entertained the petition subject to the assessee undertaking to deposit 10 per cent of the disputed tax.

Decision

Violation of Section 75(7): The High Court held that under Section 75, the confirmed demand cannot exceed the amount specified in the SCN, nor can the order travel beyond the grounds stated in the notice.
Treatment of Impugned Order: Since the determination exceeded the proposed demand, the Court directed that the impugned order be treated merely as a fresh SCN to which the assessee could submit a response within eight weeks.
Conditional Quashing & Remand: The impugned order was set aside subject to the assessee pre-depositing 10 per cent of the disputed tax within two weeks (failing which the writ petition would stand dismissed).
Liberty for Supplementary Notice: The Revenue was granted liberty to issue a supplementary SCN within four weeks and pass a fresh order after affording an opportunity of personal hearing.

Key Takeaways

Strict Statutory Boundary: Section 75(7) prohibits adjudicating authorities from confirming tax, interest, or penalties that exceed the amounts or travel beyond the grounds set forth in the initial SCN.
Remedial Conversion: Orders issued in excess of SCN parameters may be treated as fresh show cause notices by the court, preserving the taxpayer’s right to respond and defend.
Pre-deposit Conditional Relief: Courts may extend writ relief against time-barred administrative orders on equity grounds, contingent upon a mandatory pre-deposit of a portion of the disputed tax demand.

HIGH COURT OF CALCUTTA

Raj Kumar Borthakur

Joint Commissioner of Revenue

Raja Basu Chowdhury, J.

WPA No. 464 of 2026

SEPTEMBER 9, 2026

Dhiraj Lakhotia, Ms. Radhika Agarwal, Ms. Parmita Chowdhury, Ms. Nikita Kundu, Ms. Neha Lama and Ms. Khusi Kundu for the Petitioner. Jagriti Mishra, Ld. AAAG and Ms. Esha Acharya for the Respondent.

ORDER

1. At the very outset it may be recorded that though the State is not represented at the time of call, however, since Mr. Jagriti Mishra, learned AAAG is present in Court, I direct him to appear in the matter along with Ms. Esha Acharya, learned advocate. Let their appointments be regularized.

2. The present writ petition has been filed challenging the order dated 28^th December 2023 passed under Section 73 of the WBGST /CGST Act, 2107 (hereinafter referred to as the said Act) in respect of the tax period from April 2017 to March 20-18.

3. Mr. Lakhotia, learned advocate appearing for the petitioner submits that though the show cause cum demand notice dated 29^th September 2023 was restricted to Rs.1,13,55,828/-, the proper office while making the determination had enhanced the same to Rs.2,25,47,046/-. According to him, the aforesaid is in violation of the provisions of Section 75(7) of the said Act.

4. Having heard the learned advocates appearing for the respective parties, I find that the petitioner has an alternative remedy, however, time to file the appeal has expired long back. The explanation provided is also not sufficient. However, in the peculiar facts, and on the basis of the petitioner’s undertaking, to pay 10 per cent of the tax in dispute, in the form of an email filed in Court by Mr. Lakhotia which is taken on record, the writ petition is taken up for consideration.

5. Since this Court finds that in the instant case an order has been passed determining a sum of Rs.1,03,23,480/- + 1,11,91,218/- + 10,32,348 aggregating to Rs. 2,25,47,046/- as tax, interest and penalty respectively and since, the total amount of tax, interest and penalty demanded in the order cannot be in excess of the amount specified in the show cause cum demand notice and no demand can be confirmed on the ground other than the grounds specified in the notice to show cause, in my view the above order dated 28^th December 2023 should be treated as a show cause notice for the petitioner to respond to the same within a period of eight weeks from date. The proceeding is accordingly remanded to the proper officer.

6. The proper officer shall also be at liberty to provide for a supplementary show cause, provided the same is filed within a period of four weeks from date. Accordingly, the proper officer is directed to hear out and dispose of the proceedings in accordance with law after giving an opportunity of hearing to the petitioner.

7. As a sequel thereto, the order dated 28^th December 2023 is set aside on the expressed undertaking as recorded above that the petitioner shall deposit by way of form GST DRC – 03, a sum equivalent to 10 per cent of the tax in dispute being Rs.10,32,342/- with the respondents within two weeks from date.

8. It is made clear that if the above direction for deposit is not complied with by the petitioner, the petitioner shall not be entitled to the benefit of this order and the writ petition shall stand automatically dismissed without further reference to this Court and in such event, the respondents shall be at liberty to enforce this order in accordance with law.

9. The writ petition is accordingly disposed of.

10. All parties shall act on the basis of server copy of this order duly downloaded from this Court’s official website.