TaxTMI 
TaxTMI 
TaxTMI 
The adjudicating authorities as well as the first appellate authority in several cases totally ignore the provisions contained in Section 75 on general provisions relating to determination of tax. Sub section 4 is very powerful one and the officers are expected to pass orders ignoring the provisions contained in sub section 4 of Section 75 on principles of natural justice in rarest of the cases where SCN is properly served, the authority is aware that the tax payer is in receipt of SCN in any one of the mode permitted and despite the opportunity of personal hearing being offered, the tax payer chooses not to attend the case.
In reality, in most of the cases SCN are served by way of uploading under notices column of the GST portal and in many cases, especially for the years 2017-18 and 2018-19, the notices were not seen by the taxpayer and orders have been passed without ensuring that the mode of service of SCN was an effective mode. Several high courts have come to the rescue of the taxpayer wherever the cases were filed under writ with the respective jurisdictional high courts.
Recently Allahabad High Court has handled a case under Section 75 (7) which provides that the demand in order shall not be in excess of the amount specified in the SCN and no demand shall be confirmed on the grounds other than the grounds specified in the notice.
In the instant case SCN for the period from July 2017 till March 2018 was issued under section 73 on 29/09/2023 raising a demand of Rs. 8,81,080. The taxpayer did not reply the SCN and also did not appear the personal hearing and the officer passed the order on 18/11/2023 confirming a total demand of Rs. 32,97,336 which includes tax, interest as well as the penalty.
Aggrieved by the above order, which is in complete violation of Section 75 (7), the petitioner approached the Allahabad high court for granting required relief. It was argued by the revenue that no interference is required as interest as well as penalty are automatic even when there is no mention on the SCN about interest and penalty and accordingly the writ petition deserves to be dismissed.
The counsel for the petitioner argued on the basis of Section 75(7) wherein all the components including tax interest as well as penalty put together should not exceed the demand raised in the SCN. The operative portions of the order dated 07/05/2025 passed by the Division Bench is furnished below.
6. Provisions of Section 75(7), inter alia, read as under:
'(7) The amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice.'
7. A perusal of the above would reveal that Section 75 deals with general provisions relating to determination of tax and sub-section (7) specifically stipulates that the amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice.
8. Admittedly, in the present case, the show-cause notice merely indicates the amount of Rs. 8,81,080/- as representing the tax, interest and penalty and the demand qua the three components has been raised at Rs. 32,97,336/-, which is ex facie contrary to the provisions of Section 75(7) of the Act.
9. In view of the above discussion, on account of violation of provisions of Section 75(7) of the Act, the order impugned cannot be sustained.
10. Consequently, the writ petition is allowed. Order dated 18.11.2023 (Annexure-5) is quashed and set aside and the matter is remanded back to the respondent no. 2 to provide an opportunity to the petitioner to file response to the show-cause notice and after providing opportunity of hearing, pass a fresh order in accordance with law. (end of the order).
The citation of the above case is Allahabad High Court in the matter of M/s Vibhuti Tyres verses the State of U P and another - 2025 (5) TMI 767. Accordingly, it is expected that based the original SCN dated 29/09/2023, the amount confirmed in order dated 18/11/2023 may be brought down. Let us hope that the taxpayer gets substantial relief and the issue gets closed as no demand may be raised now even under section 74 as on date as the period is from 01/07/2017 to 31/03/2018.
Authorities may ensure that the orders passed by them are in line with the requirements of Section 75 and are not quashed at a later date by a higher authority. Tax professionals may ensue that all orders passed at adjudication level are in compliance with Section 75 in all aspects.