Additional demand in the order, not raised in the SCN but discussed in Personal Hearing.

[KALLESHAMURTHY MURTHY K.N.]

Sir,

A TP has filed replies along with supporting documents. While passing order U/s 73, certain additional tax liability was demanded based on the discrepancies noticed from the documents so filed, such as rate of tax difference, CGST and SGST collected on interstate supply, invoices missed to enter the address of the recipient [but GSTIN entered], Commodity name not mentioned in the invoice [but HSN mentioned], which were not part of SCN. Is the additional demand so raised correct? The reason given for the demand is that the taxpayer has not produced documents even on demand, but after SCN, he has produced. However, facts have been discussed in the personal hearing.

[KASTURI SETHI]

Dear Sir,

Personal hearing is an integral part of Adjudication Order and NOT of SCN. The Adjudicating Authority must have issued corrigendum/addendum to the SCN prior to the adjudication of the SCN. By confirming the demand of additional amount of tax the Adjudicating Authority has violated Section 75 (7) of CGST Act.

There are case laws in favour of the assessee on this issue.

[KALLESHAMURTHY MURTHY K.N.]

Sir,

Thank you so much. It is a good point," personal hearing is for the adjudication order and not for SCN".

[KASTURI SETHI]

The Allahabad High Court delivered a significant ruling in the matter of S.S. Enterprises Vs State of U.P. - 2025 (12) TMI 936 - ALLAHABAD HIGH COURT, where it quashed a GST demand order on the ground that the final demand raised exceeded the amount proposed in the original show-cause notice. This decision underscores the strict adherence required to statutory provisions under the Goods and Services Tax Act, 2017, particularly Section 75(7), which explicitly limits the quantum of demand that can be confirmed in the final order to the amount specified in the notice issued to the assessee.

 

[KASTURI SETHI]

2025 (5) TMI 1435 - ALLAHABAD HIGH COURT

[KASTURI SETHI]

Dear Sir,

It is with reference to your observation at serial no.1.1 above.

It is a matter of pleasure for me that you are satisfied with my reply.

I also learn from your replies and save the same for future.

[KALLESHAMURTHY MURTHY K.N.]

Sir,

Kasturi Sethi Ji,

Your words are great for me. I am tiny before your gigantic knowledge. I am answering in this forum to learn.

Where the issues are raised, our knowledge improves.

[Sadanand Bulbule]

While welcoming the replies, it may also be noted that whenever there is an additional demand over and above the SCN, Section 75(7) plays its remedial role. In that situation, tax payer has an easy way out under Section 161 by way of filing application for rectification of error for lack of essential jurisdiction.

Recently I too suffered the similar situation. But I filed two applications under Section 161, the first one was summarily rejected, partly due to EGO. Later I forced the officer to cosnder second application which culminated in the reduction of additional demand besides other relief.

Sometimes "extra force" works effectively.

[KASTURI SETHI]

If the Adjudicating Authority has travelled beyond the scope of the SCN deliberately, then it is out of the meaning, essence and scope of the word, "error" Please go through the legal meaning of the word, "error". Thus opting for rectification application would prove fruitless. Hence wastage of time. It is a matter of common knowledge that Adjudicating Authority is to remain within scope of SCN. Every Proper Officer knows this legal fact/boundary. Even then SUCH orders being passed frequently. So filing appeal is advisable.

My above views align with the contents of your article "The boundary of adjudication: the absolute limitation on gst demand under section 75(7)".

[KASTURI SETHI]

2026 (3) TMI 424 - MADRAS HIGH COURT - Tirumala Milk Products Pvt. Ltd. Versus State Tax Officer Group I, Intelligence II, Chennai

 

[Sadanand Bulbule]

Peruse my article dated 29/05/2026 on Section 75(7) published on TaxTMI.

[KALLESHAMURTHY MURTHY K.N.]

Sir, I read your Article "The boundary of adjudication: the absolute limitation on gst demand under section 75(7)"

It is an additional strength for the issue. Thanks, Sir.

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[VENU K]

The logic of 75(7), in my opinion, can be traced to the fact that notices under Sec 73,74,74 A etc are part of Chapter XV of CGST Act which is relating to demands and recovery. Naturally, such an SCN is the first step the department takes to demand and recover taxes. In GST law Assessment provisions are part of Chapter XII.

Naturally, show cause notice is the end of the investigation as far as department is concerned. No further deviations are permitted from SCN at time of adjudication. Sec 75(7), thankfully acknowledges this fact in the Act itself explicitly.

[KALLESHAMURTHY MURTHY K.N.]

Thanks Venu K Sir, for more clarity on the issue.

AI Summary

GST adjudication limits require demands to stay within show-cause notice proposals, despite later document discrepancies or personal-hearing discussions.
GST adjudication demands must remain within the scope and quantum proposed in the show-cause notice under section 75(7). Discrepancies identified from documents submitted after the notice cannot support an additional demand unless they formed part of the notice proposal. Discussion at personal hearing does not enlarge the notice, as hearing is part of adjudication. An appropriate corrigendum or addendum should be issued before adjudication where additional grounds or liability are proposed, ensuring the taxpayer has notice of the case to be answered.