Show-cause notice limits control GST demand orders: excess tax, penalty and interest beyond the notice cannot be sustained.

Section 75(7) of the CGST Act bars confirmation of a demand beyond the amount specified in the show-cause notice and prevents adjudication on grounds not stated in that notice. Here, the notice proposed a lower demand, but the final order imposed a substantially higher liability, including penalty and interest outside the notice. The demand was therefore unsustainable for breach of the statutory limit. The writ petition was allowed, the order was quashed, and the matter was remanded for fresh adjudication after giving the taxpayer an opportunity to respond and be heard.

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Issues: Whether the demand order could be sustained when the tax, penalty and interest demanded in the order exceeded the amount specified in the show-cause notice.

Analysis: Section 75(7) of the Central Goods and Services Tax Act, 2017 prohibits confirmation of a demand in excess of the amount specified in the notice and also bars confirmation on grounds other than those stated in the notice. The notice in the present case specified a lower amount, whereas the impugned order raised a substantially higher demand, including penalty and interest beyond the notice. Such variation was held to be contrary to the statutory mandate.

Conclusion: The impugned demand order could not be sustained. The writ petition was allowed, the order was quashed, and the matter was remanded for fresh adjudication after affording an opportunity to file a response and be heard.

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