Non-service and excessive demand breach natural justice; matter remanded for fresh hearing and decision under Section 75(7)

HC held that non-service of the notice via effective communication violated principles of natural justice and that the demand exceeded the grounds and amounts specified in the show-cause notice, contrary to Section 75(7). The impugned order could not be sustained; the matter was remanded to respondent for issuance of a proper opportunity to file a response and for hearing, after which a fresh decision must be passed in accordance with law. The petition was allowed by way of remand.

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Petition challenges order dated 20.08.2024 raising demand of Rs. 46,68,188 under the Goods and Services Tax Act, 2017 for July 2017-March 2018. A show-cause notice dated 26.11.2023 in GST DRC-01, uploaded under "Additional Notice and Order" on the portal and not otherwise communicated, specified recovery of Rs. 28,01,001 (tax, penalty and interest @18% p.a.). The impugned order, however, confirmed demand of Rs. 46,68,188 - including penalty of Rs. 14,19,238 and interest of Rs. 18,40,000 - exceeding the amounts and grounds stated in the notice. Section 75(7) provides: "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." Holding that the order contravenes Section 75(7), the court quashed the order and remanded the matter for issuance of adequate opportunity to file a response and for passing a fresh order in accordance with law.

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