2024 (6) TMI 989 - HC - GST

Tax Authorities Exceed Show Cause Notice Limits: Order Quashed, Proceedings Must Restart Within Four Months Under Section 75

HC allowed the writ petition challenging a tax demand order that exceeded the original show cause notice amount. The court quashed the order and directed ... Show cause notice - limitation on demand in notice - compliance with Section 73(7) of Uttarakhand Goods and Services Tax Act, 2017 - quashing of order for non-compliance with notice requirements - de-novo proceedingsShow cause notice - limitation on demand in notice - compliance with Section 73(7) of Uttarakhand Goods and Services Tax Act, 2017 - quashing of order for non-compliance with notice requirements - Impugned demand confirmed in excess of the amount specified in the show cause notice is unsustainable and liable to be quashed - HELD THAT: - Petitioner challenged the order dated 06.11.2023 on the sole ground that the demand confirmed substantially exceeded the amount stated in the show cause notice in Form GST DRC-01. The Court noted the provision quoted from the statute that the amount demanded in the order shall not exceed the amount specified in the notice and that no demand shall be confirmed on grounds other than those specified in the notice. The State conceded that the impugned order did not comply with that statutory prescription because the demand in the order was much higher than the amount indicated in the show cause notice. On that basis the Court held that the impugned order was unsustainable and liable to be set aside. [Paras 5, 6, 7]Impugned order dated 06.11.2023 quashed for failing to confine the demand to the amount and grounds specified in the show cause noticeDe-novo proceedings - mandate prescribed in the Statute - Proper Officer permitted to initiate fresh proceedings subject to statutory mandate and time expectation - HELD THAT: - Although the impugned order was quashed, the Court left open the statutory remedy by permitting the Proper Officer to initiate proceedings de-novo. The Court directed that any fresh final order should be passed only after following the statutory mandate and expressed the expectation that such order would be passed within four months. [Paras 7]Proper Officer may proceed de-novo, adhering to the statutory requirements; Court expects final order within four monthsFinal Conclusion: Writ petition allowed; impugned demand order dated 06.11.2023 quashed for exceeding the amount and grounds specified in the show cause notice; Proper Officer may initiate de-novo proceedings subject to the statutory mandate and the Court's expectation of disposal within four months. Issues involved: Challenge to order u/s 73(9) of Uttarakhand Goods and Services Tax Act, 2017 for excess tax demand compared to show cause notice.The petitioner, a Company paying tax under State GST, challenged an order dated 06.11.2023 passed u/s 73(9) of Uttarakhand Goods and Services Tax Act, 2017, demanding &8377;91,95,708/- as tax, interest & penalty. The challenge was based on the discrepancy between the amount mentioned in the show cause notice (Form GST DRC-01) which was &8377;27,06,340/- and the ordered amount. The petitioner contended that the order was unsustainable as per the provision in Sub-Section (7) of Section 75 of the Act, which restricts the demanded amount to not exceed the notice amount and grounds specified therein.During the proceedings, the learned Brief Holder for the State of Uttarakhand acknowledged that the impugned order did not align with the provision in Sub-Section (7) of Section 75 of the Uttarakhand Goods and Services Tax Act, 2017. It was admitted that the demand in the order surpassed the amount indicated in the show cause notice, thus not complying with the statutory requirement regarding the limit of tax, interest, and penalty to be demanded.Considering the arguments and the legal provisions, the High Court allowed the writ petition and quashed the impugned order dated 06.11.2023. The Court directed the Proper Officer to initiate proceedings de-novo, emphasizing the need for adherence to the statutory mandate. It was further stipulated that the final order by the Proper Officer should be issued within four months, ensuring compliance with the provisions of the Statute.