Reversal of Input Tax Credit: SCN specificity required under Section 75(7); adjudication set aside, fresh proceedings permitted.

Adjudication reversed where the authority imposed reversal of input tax credit on a product not specified as exempt in the show-cause notice; the notice failed the statutory requirement of particularity under Section 75(7), rendering the adjudication procedurally infirm and liable to be set aside. The respondents are permitted to initiate fresh proceedings in accordance with law. The period from February 24, 2025 to January 21, 2026 (or receipt of certified copy, if later) is excluded for computation of limitation for any fresh proceedings based on observations in the impugned order.

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Issues: Whether the adjudication order dated February 24, 2025, which held that the goods dealt in by the petitioners were not exempt and directed reversal of ITC, is vitiated for non-compliance with Section 75(7) of the Central Goods and Services Tax Act, 2017 by deciding a ground not raised in the show-cause notice.

Analysis: The show-cause notice framed the discrepancy as "ITC found reversible in proportion to exempt supply, if any" and required documentary reconciliation of exempted inward and outward supplies. The adjudication order proceeded to determine that the product did not qualify as exempt supply although that specific factual/legal question was not put to the petitioners in the notice. Section 75(7) mandates that grounds of adjudication must be those which the noticee was required to meet; a determination on a new ground without prior notice deprives the noticee of an opportunity to answer. The adjudication therefore proceeded on a basis materially different from the notice and failed to afford the petitioners the required opportunity to meet the specific charge which formed the basis of the adverse finding. The Court excluded the period from the date of the impugned order to the date of disposal from computation of limitation for any fresh proceedings and permitted initiation of fresh proceedings in accordance with law.

Conclusion: The adjudication order dated February 24, 2025 is set aside for non-compliance with Section 75(7) of the Central Goods and Services Tax Act, 2017; respondents are free to initiate fresh proceedings in accordance with law and the period from February 24, 2025 until disposal of the writ or receipt of certified copy is excluded for limitation purposes.

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