GST adjudication cannot exceed the show cause notice, and exemption claims must be considered before final liability is fixed.

Section 75(7) of the Maharashtra GST Act requires the adjudication order to stay within the grounds and amount stated in the show cause notice; where the notice proposed one quantum and the order confirmed a substantially higher liability, the order was unsustainable. The document also notes that an exemption defence under Notification No. 12/2017 and Section 11(1) of the CGST Act, based on consultancy services rendered to Government bodies and undertakings, had to be considered before final adjudication. The notice and order were therefore quashed, and the matter was remitted for fresh consideration on merits after hearing the taxpayer, with liberty to issue an additional notice.

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Issues: (i) Whether the impugned show cause notice and adjudication order were unsustainable for travelling beyond the grounds and demand stated in the notice, in breach of Section 75(7) of the Maharashtra Goods and Services Tax Act, 2017; (ii) Whether the petitioner's claim of exemption under Notification No. 12/2017 and Section 11(1) of the Central Goods and Services Tax Act, 2017 required consideration before final adjudication.

Issue (i): Whether the impugned show cause notice and adjudication order were unsustainable for travelling beyond the grounds and demand stated in the notice, in breach of Section 75(7) of the Maharashtra Goods and Services Tax Act, 2017.

Analysis: The notice quantified the proposed demand at Rs. 57,55,627.44/-, while the adjudication order fastened a liability of Rs. 2,06,46,142/- inclusive of tax, interest and penalty. The statutory mandate under Section 75(7) requires that the amount confirmed in the order cannot exceed the amount specified in the notice and no demand can be confirmed on grounds other than those stated in the notice. Since the order went beyond the notice, it could not be sustained.

Conclusion: The notice and the adjudication order were held unsustainable and liable to be quashed.

Issue (ii): Whether the petitioner's claim of exemption under Notification No. 12/2017 and Section 11(1) of the Central Goods and Services Tax Act, 2017 required consideration before final adjudication.

Analysis: The petitioner had asserted that the consultancy services rendered to Government bodies and undertakings were exempt, but this contention was not dealt with in the adjudication order. A material exemption defence going to tax liability required consideration on merits after hearing the petitioner.

Conclusion: The failure to consider the exemption claim rendered the order unsustainable on this ground as well.

Final Conclusion: The impugned notice and order were quashed, and the matter was sent back for fresh consideration on merits after hearing the petitioner, with liberty to issue an additional demand notice.

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