Quantification requirement in show cause notices for interest on shortpaid tax leads to quashing of unquantified adjudication, fresh notice permitted
Requirement for quantification of interest in a show cause notice was enforced: the court found that interest liability known to authorities was not quantified in the notice, breaching the statutory notice requirement and rendering subsequent adjudication beyond the specified grounds and amounts invalid. The tribunal held that a provision addressing unquantified interest in orders does not cure a defective notice; therefore the impugned show cause notice and adjudication order were quashed. Authorities may issue a fresh, properly quantified show cause notice and proceed in accordance with law.
Issues: Whether interest for the period April 2020 to March 2021, not quantified in the show cause notice, could be included in the adjudication order under Section 73(9) of the Goods and Services Tax Act, 2017.
Analysis: The Court examined Section 75(7) which provides that the amount of tax, interest and penalty demanded in the order shall not exceed the amount specified in the notice and no demand shall be confirmed on grounds other than those specified in the notice. The respondents relied on Section 75(9) which states that interest on short-paid tax shall be payable whether or not specified in the order determining tax liability. The Court distinguished Section 75(9) as addressing omission in the adjudication order itself, not omission in the earlier show cause notice. The record showed the show cause notice dated November 13, 2024 failed to quantify interest for 2020-21 while the adjudication order imposed interest for that period; this omission meant the demand exceeded the specification in the notice contrary to Section 75(7).
Conclusion: The impugned show cause notice and the adjudication order under Section 73(9) are quashed and set aside for contravening Section 75(7) of the Act, 2017; authorities are permitted to issue a fresh show cause notice in accordance with law.
TaxTMI 
AI Drafter ✕
TaxTMI 
