GST adjudication cannot confirm interest or penalty beyond the show cause notice; consequential attachment was also quashed.

Under the GST regime, an adjudication order cannot travel beyond the show cause notice: where the notice proposed only tax recovery and did not seek interest or penalty, the authority could not validly confirm those levies under Section 75(7) of the CGST Act. The High Court held that the interest and penalty components were beyond the scope of the notice and therefore unsustainable. It also quashed the consequential attachment order and remitted the matter to the adjudicating authority for fresh orders in accordance with law.

---

---

Issues: Whether interest and penalty could be imposed in the adjudication order when the show cause notice did not propose such levies, and whether the consequential demand and attachment orders were sustainable.

Analysis: The show cause notice for the relevant financial year proposed only tax recovery and did not contain any proposal for interest or penalty. The adjudication order nevertheless imposed interest and penalty, which was found to be contrary to Section 75(7) of the Central Goods and Services Tax Act, 2017, because the confirmed demand cannot travel beyond the grounds stated in the notice.

Conclusion: The order imposing interest and penalty beyond the notice was held unsustainable and was quashed. The attachment order was also quashed, and the matter was remitted to the adjudicating authority for fresh orders.

Ratio Decidendi: An adjudication order under the GST regime cannot confirm interest or penalty beyond what was proposed in the show cause notice, and any such order is liable to be set aside.

---