Notice to show-cause in GST adjudication: limits on scope, disclosure of GST back-office data, and challenge to reverse/forward charge conversion

Limits of adjudication in GST notices: a notice to show-cause cannot be widened beyond the grounds specified, and adjudication or appeal must conform to those confines; where an authority departs from the notice by treating reverse charge supplies as forward charge, that interpretation cannot be unilaterally imposed on the taxpayer and requires opportunity for defence. Natural justice requires disclosure of material, particularly where the notice relies on GST back-office data within the special knowledge of tax authorities, because taxpayers may lack access to such data and thus lack effective opportunity to respond. A fresh show-cause may be issued; limitation objections are preserved only if available when the original notice issued.

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Issues: Whether the adjudication order and the appellate order are invalid for confirming demand on a ground other than those specified in the notice to show-cause, in violation of Section 75(7) of the WBGST Act, 2017, and whether the petitioners must be furnished the back-office data and afforded fresh opportunity of hearing; and whether the impugned orders require setting aside and remand.

Analysis: The notice to show-cause was confined to alleged understatement of turnover in GSTR-3B. The adjudicating authority based its demand on a different premise treating supplies under reverse charge as forward charge pursuant to a notification thereby changing the basis of the notice. Section 75(7) prohibits confirmation of demand on grounds other than those specified in the notice. The appellate authority acknowledged the deviation but characterised it as a mere technical/quantification issue; however the change involved a substantive re-framing of liability and could not be treated as mere quantification. Further, where the notice relies on data from the GST back-office portal (special knowledge of the tax authority), the petitioner must be provided the relevant information to enable an effective reply and hearing. Given these defects, the adjudication and appellate orders cannot stand without fresh adjudication after providing information and opportunity.

Conclusion: The appellate order dated April 25, 2025 and the adjudication order dated May 17, 2023 are set aside; the matter is remanded to the Proper Officer for reconsideration after furnishing the petitioners with the relevant back-office information and affording them an opportunity of hearing; the Proper Officer may, if necessary, issue an additional show-cause notice framing grounds in accordance with law.

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