2026 (3) TMI 424 - HC - GST

Demand Limitation in Show Cause Notices: confirmation beyond proposed amount requires setting aside and fresh adjudication.

An adjudicating authority lacks jurisdiction to confirm a demand in excess of the amount specified in the show cause notice; where an order confirms a ... Requirement to confine demand to amount proposed in the show cause notice under Section 75(7) - violation of statutory limitation of notice - remand for fresh adjudication where demand exceeds show cause notice. Requirement to confine demand to amount proposed in the show cause notice under Section 75(7) - HELD THAT:- The Court noted that the impugned order for the tax period 2018-2019 confirmed a demand substantially higher than the amount proposed in the Show Cause Notice in Form GST DRC-01. That discrepancy rendered the impugned order contrary to the requirement that the final demand must be confined to the proposal in the show cause notice as mandated by Section 75(7) of the GST enactments. For that reason the Court set aside the impugned order and remitted the matter to the Respondent for fresh consideration on merits and in accordance with law. The petitioner was directed to file a proper reply to the Show Cause Notice treating the impugned order as an addendum within thirty days, and the Respondent was directed to pass a final order expeditiously, preferably within three months of such reply. The Court further recorded that if the petitioner fails to comply with the stipulations the Respondent may proceed to recover tax as if the writ petition had been dismissed, subject to giving due notice before passing any such order. [Paras 5, 6, 7, 8, 9] Final Conclusion: Writ petition disposed of at the stage of admission by setting aside the impugned order for the tax period 2018-2019 as contrary to Section 75(7); the matter is remitted for fresh adjudication with directions for the petitioner. Issues: Whether an adjudicating authority can confirm a demand exceeding the amount proposed in the show cause notice and whether the impugned order confirming a higher demand should be set aside and remitted for fresh adjudication.Analysis: The impugned order confirmed a demand substantially larger than the amount proposed in the Show Cause Notice in Form GST DRC-01. The matter was examined with reference to the limits of the original notice and the consequences of confirming an amount beyond that proposal. The petitioner is given an opportunity to file a proper reply treating the impugned order as an addendum to the Show Cause Notice, and the respondent is directed to pass a fresh order on merits after giving due notice and considering the petitioner's reply.Conclusion: The impugned order confirming demand beyond the amount proposed in the show cause notice is set aside and the matter is remitted for fresh adjudication; the petitioner is granted relief. Ratio Decidendi: An adjudicating authority cannot confirm a demand exceeding the amount proposed in the show cause notice; an order so confirming must be set aside and remitted for fresh consideration after giving the affected party an opportunity to reply.