2025 (12) TMI 936 - HC - GST

GST demand set aside for breaching Section 75(7) by exceeding show cause notice and adding new grounds

HC set aside the impugned assessment order and consequential demand under the GST regime on the ground that it violated Section 75(7) of the Act. The show ... Rejection of appeal of the petitioner on the ground of delay - petitioner was unaware of notice uploaded on 'Additional Notices and Orders' tab - HELD THAT:- A perusal of Section 75(7) 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. Admittedly, in the present case, the show-cause notice merely indicates the amount of Rs. 32,11,470/- as representing the tax, interest and penalty and the demand qua the three components has been raised at Rs. 60,54,984/-, which is ex facie contrary to the provisions of Section 75(7) of the Act. So far as the plea pertaining to not providing any opportunity of personal hearing is concerned, once it is the case of the petitioner that it was unaware of the issuance of the show-cause notice, the fact that in the notice issued to the petitioner, the date of filing of reply was indicated, looses its significance and it cannot be said that on account of such indication, the notice, on its own, would stand vitiated. Thus, on account of violation of provisions of Section 75(7) of the Act, the order impugned cannot be sustained - petition allowed by way of remand. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the demand order passed under Section 74 of the Goods and Services Tax Act, 2017, by demanding tax, interest and penalty in excess of the amount specified in the show-cause notice, is contrary to Section 75(7) of the Act. 1.2 Whether the absence of a specified date of personal hearing in the show-cause notice, and the assessee's non-awareness of the uploaded notice, vitiated the proceedings on the ground of violation of principles of natural justice. 1.3 Consequentially, whether the appellate and original orders could be sustained. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Demand in excess of amount specified in show-cause notice under Section 75(7) Legal framework 2.1 The Court referred to Section 75(7) of the Goods and Services Tax Act, 2017, which provides 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 that no demand shall be confirmed on grounds other than those specified in the notice. Interpretation and reasoning 2.2 The Court noted that the show-cause notice indicated a consolidated amount of Rs. 32,11,470/- representing tax, interest and penalty. 2.3 The Court further noted that the demand actually raised in the order under challenge, qua tax, interest and penalty, was Rs. 60,54,984/-. 2.4 The Court held that this enhancement of the aggregate demand in the order, beyond the amount specified in the show-cause notice, was ex facie contrary to Section 75(7) of the Act. Conclusions 2.5 The Court concluded that the impugned demand order was unsustainable on account of violation of Section 75(7) of the Act. Issue 2: Alleged violation of principles of natural justice regarding personal hearing Interpretation and reasoning 2.6 The assessee contended that, while the show-cause notice and reminder fixed dates for filing reply, the column pertaining to the date of personal hearing mentioned 'NA', which was alleged to be violative of principles of natural justice. 2.7 The Court observed that the assessee's own case was that it was unaware of the issuance of the show-cause notice as it had been uploaded under the 'Additional Notices and Orders' tab and no response was filed. 2.8 In this backdrop, the Court held that, once the assessee claimed non-awareness of the notice itself, the indication of a date for filing reply and the marking of 'NA' against the date of personal hearing would lose significance, and the notice could not be said to be vitiated on that ground alone. Conclusions 2.9 The Court did not set aside the proceedings on the independent ground of denial of personal hearing arising from the contents of the show-cause notice, but directed a fresh opportunity of hearing in consequence of setting aside the demand order for violation of Section 75(7). Issue 3: Sustainability of the appellate and original orders and consequential relief Interpretation and reasoning 2.10 The appellate order had rejected the assessee's appeal on the ground of delay. The Court, having found the original demand order to be contrary to Section 75(7), examined the sustainability of both the orders. 2.11 Since the foundational demand order itself was held unsustainable, the appellate order upholding the same (by declining to entertain the appeal) could not stand. Conclusions 2.12 The Court allowed the writ petition, quashed the demand order dated 11.02.2025 and the appellate order dated 13.10.2025, and remanded the matter to the original authority to permit the assessee to file a response to the show-cause notice and, after granting an opportunity of hearing, to pass a fresh order in accordance with law.