Scope of adjudication order in GST proceedings: order quashed and remanded for hearing where adjudication exceeded show-cause grounds

Adjudication in GST proceedings proceeded on a basis different from the show-cause notice, violating the statutory mandate that demand can be confirmed only on grounds specified in the notice; this breach deprived respondents of effective opportunity to meet allegations based on back-office data and was treated as impermissible expansion of scope of adjudication. The adjudication and appellate orders were set aside and the matter remanded to the proper officer for reconsideration after affording a fresh opportunity of hearing to the taxpayers, with direction to confine adjudication to grounds specified in the notice.

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Issues: (i) Whether the adjudication order confirmed demand on grounds other than those specified in the notice to show-cause in violation of Section 75(7) of the GST Act, 2017; (ii) Whether the petitioners were entitled to disclosure of relevant material from the GST back-office (GST B.O. portal) relied upon in the notice to show-cause to enable effective reply.

Issue (i): Whether the adjudicating authority and the appellate authority erred in confirming demand by proceeding on a ground different from the one specified in the notice to show-cause, thereby violating Section 75(7) of the GST Act, 2017.

Analysis: The notice to show-cause was confined to alleged under-declaration of turnover in GSTR-3B. The adjudicating authority based the adjudication on a different premisetreatment of certain supplies as made under forward charge by relying on a notification and the petitioners alleged issuance of forward-charge invoicesthereby changing the basis of demand from the ground specified in the notice. Section 75(7) expressly prohibits confirmation of demand on grounds other than those specified in the notice. The appellate authority acknowledged the deviation but treated it as a mere technicality; the Court found that the change involved a substantive legal question not amenable to being treated as mere quantification.

Conclusion: The adjudication and appellate orders confirmed demand on grounds different from those specified in the notice in violation of Section 75(7) of the GST Act, 2017; this infirmity is against the petitioners.

Issue (ii): Whether the petitioners were entitled to disclosure of the GST back-office material relied upon in the notice to show-cause to enable effective response.

Analysis: The notice was based on data from the GST B.O. portal within the exclusive knowledge domain of the revenue. The petitioners may not have had access to that data and therefore could be deprived of an effective opportunity to reply. Principles of fair adjudication and effective opportunity to be heard require disclosure of material in the possession of the authority that forms the basis of the notice, subject to lawful restrictions.

Conclusion: The petitioners are entitled to be provided the relevant information from the GST back-office relied upon in the notice to show-cause to enable effective response.

Final Conclusion: The Court enforces the statutory protection that demands must not be confirmed on grounds other than those in the notice and requires disclosure of relevant back-office material where necessary; the matter is remitted for fresh consideration consistent with these directions.

Ratio Decidendi: Section 75(7) of the GST Act, 2017 prohibits confirmation of tax demand on any grounds other than those specified in the notice to show-cause, and where a notice is founded on material within the revenue's exclusive knowledge, the authority must disclose relevant material to afford an effective opportunity of reply.

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