Fresh SCN demanding more GST as compared to original SCN

[Sumeet Tholle]

Sir,

We filed Writ Petition before High Court as GST Tax demand as per order is more the SCN. High Court allowed our WP as quantravention of Sec. 75(7). HC also allowed to issue fresh SCN. Now department issued fresh SCN and demanded more GST as compared to original SCN (and also more than earlier order). Department also covered new points i.e. amounts reflected in IT TDS etc. and increased demand. We are feeling though our WP allowed but it is beneficial to department. Can department take undue benefit of order of High Court & demand more tax as compared to original SCN ? Request for your guidance.

[Shilpi Jain]

The new SCN will not be automatically linked to the old SCN. New points raised in the new SCN should comply with the S. 73/74 timelines.

So details required regarding the period for which the SCN is issued and the date of new SCN to comment better

[Sumeet Tholle]

Thanks Shilpi.

Issue for FY 2021-22.

Original DRC-01 dt. 18.06.2025

Form DRC-07 dt. 26.12.2025

New SCN dt. 01.06.2026

[KALLESHAMURTHY MURTHY K.N.]

The department has to obey High Court directions. Any deviation in the order for more tax than the SCN issued is a violation in terms of Sec 75(7). However, if the department has found any additional tax liability beyond the issues in the original notice, an additional SCN can be issued within the timeframe. When the original order was quashed and ordered for a fresh SCN, the entire picture will be changed. Such an act cannot be called an undue advantage by the department. Pl. note that any tax liability due to the Government will not be let out.

 

[Sumeet Tholle]

Sir, Thanks.

Issue for FY 2021-22.

Original DRC-01 dt. 18.06.2025

Form DRC-07 dt. 26.12.2025

High Court order dt. 20.04.2026

New SCN dt. 01.06.2026

[KALLESHAMURTHY MURTHY K.N.]

DRC-07 quashed, hence it has lost its validity. The Court or law may permit a fresh SCN u/s 73 if the second notice strictly concerns different discrepancies or issues than the one that was quashed.

If the department invokes the extended period for fraud, willful misstatement, or suppression of facts, the limitation period for 2021-22 to issue SCN is 30-06-2027, and for orders, it is December 31, 2027.

[KASTURI SETHI]

You cannot link the fresh SCN with the earlier SCN and Order-in-Original, these being set aside by the High Court, Both the SCN and Order-in-Original do not exist now. Why to compare ? Talk afresh now. The department can take new points (which did not exist in the earlier SCN and Order-in-Original) and increase the amount of demand.

Q. Can department take undue benefit of order of High Court & demand more tax as compared to original SCN ?

Reply : The department has acted in letter and spirit of CGST Act. Hence no undue benefit has been taken by the department. SCN is an opportunity to defend yourself de jure.

[Ganeshan Kalyani]

GST department has acted upon the direction of the HC. The tax demand escalated in fresh SCN is a matter of fresh observation of the department in your matter. If it is legally incorrect then file a reply to their point.

[KASTURI SETHI]

Dear Sir,

Correct analysis and conclusion by you in a few words.

[YAGAY and SUN]

The validity of the fresh SCN will primarily depend upon the scope of the High Court's remand order.

Section 75(7) of the CGST Act, 2017 provides that the tax, interest and penalty demanded in the adjudication order cannot exceed the amount specified in the SCN and cannot be based on grounds not contained in the SCN. Since the earlier order was quashed for violation of Section 75(7), the department cannot automatically assume that it has obtained a fresh opportunity to enlarge the case against the taxpayer.

If the High Court merely set aside the order and granted liberty to issue a fresh SCN in accordance with law, the department may argue that the earlier proceedings stood annulled and a fresh SCN can be issued based on material available on record. However, such liberty does not necessarily authorize the department to travel beyond the purpose of the remand or to fill up lacunae in the original proceedings.

Where the fresh SCN:

• raises entirely new issues (e.g., Income-tax TDS mismatches not forming part of the original SCN),

• proposes a substantially higher demand than the original SCN, or

• seeks to improve upon defects in the department's earlier case,

a strong argument exists that the department has exceeded the scope of the remand and is deriving an undue advantage from the taxpayer's successful writ petition.

Further, any new demand must independently satisfy the applicable limitation provisions and statutory requirements. The department cannot rely upon the High Court's order to bypass limitation or introduce fresh causes of action that were not the subject matter of the original proceedings.

Accordingly, the fresh SCN may be challenged if it can be demonstrated that:

1. The High Court intended only a lawful re-initiation of proceedings concerning the original dispute;

2. The department has introduced new grounds and new sources of alleged liability not forming part of the original SCN;

3. The enhanced demand effectively enlarges the scope of the dispute beyond what was contemplated by the remand order; and

4. The fresh allegations are otherwise hit by limitation or lack statutory basis.

Therefore, it cannot be said that the department is entitled, as a matter of right, to demand a higher amount merely because the earlier order was quashed. A detailed comparison of the original SCN, the High Court's operative directions, and the fresh SCN would be necessary to determine whether the department has exceeded the liberty granted by the Court.

[KASTURI SETHI]

The querist has not mentioned the word, 'Remand' in his query. We are not aware of the order portion of the High Cour Order. As per the query, the High Court has specifically allowed the department to issue afresh SCN. When we talk of "afresh SCN", it is implied that the High Court has given liberty to the department to re-examine/re-investigate the whole case. No SCN can be issued without complete investigation. In any case, re-examination/re-investigation may result in increase or decrease of the amount of the demand already raised in the earlier SCN (set aside). Similarly, re-investigation may result in addition of new issues or deletion of the issues already raised earlier in the SCN.

Whenever any case is remanded by the Higher Court to the lower authority/court, the purpose for remand is specifically mentioned in its Order. Here specific purpose is issuance of afresh SCN and hence afresh adjudication. Since SCN has been issued afresh, we cannot term it as re-adjudication.

[KASTURI SETHI]

In continuation of my reply at serial no.7 above, in a nutshell, afresh SCN means a new legal proceedings.

[KASTURI SETHI]

"We are feeling though our WP allowed but it is beneficial to department."

Dear Querist,

It is brewing in your mind that you have lost the case despite victory i.e. decision in your favour. It is not correct to think so. Seeking fair justice is a constitutional right for assessees and Govt. department both. The High Court has opened the door for both. Both are at par in the eyes of law.

[KALLESHAMURTHY MURTHY K.N.]

Sir, Point -8 is absolutely right.

[KASTURI SETHI]

Sh.Kallesamurthy Murthy Ji,

Sir, Thank you very much.

Truly speaking I got a cue from your replies at serial nos. 2 & 3 above.

AI Summary

Fresh GST show cause notice may raise new issues, but its scope must align with court directions and limitation rules.
Fresh GST proceedings after quashing of an earlier order for breach of section 75(7) were discussed in relation to whether a new show cause notice may raise a higher demand or add new issues. The discussion stated that the answer depends on the scope of the High Court's liberty, the statutory requirements, and limitation under sections 73 and 74, including the extended period for fraud, wilful misstatement or suppression. A fresh notice was said not to be automatically tied to the earlier notice once both have been quashed.