2025 (5) TMI 1435 - HC - GST

Demand of tax along with penalty and interest - petitioner unaware of issuance of notice u/s 74 -determination of tax - violation of statutory mandate under Section 75(7) - Challenged the impugned order - HELD THAT - Admittedly in the present case the show-cause notice merely indicates the amount of Rs. 66, 13, 874.78 as representing the tax and penalty along with interest @ 18% p.a. and the demand qua the three components has been raised at Rs. 1, 34, 94, 294/- even if the notice qua interest amount is taken in compliance of the provisions the amount of penalty and interest thereon is beyond the show cause notice which is ex facie contrary to the provisions of Section 75(7) of the Act. Thus on account of violation of provisions of Section 75(7) of the Act the order impugned cannot be sustained. Consequently the writ petition is allowed. Order dated 30.12.2024 (Annexure-4) is quashed and set aside and the matter is remanded back.

Summary

The Allahabad High Court, through Hon'ble Chief Justice Arun Bhansali and Hon'ble Justice Kshitij Shailendra, allowed the writ petition challenging the order dated 30.12.2024 which demanded Rs. 1,34,94,294/- from the petitioner for the period April 2019 to March 2020 under the GST Act, 2017. The petitioner contended that the demand exceeded the amount specified in the show-cause notice dated 25.11.2023 under Section 74 of the Act, which sought recovery of Rs. 66,13,874.78 only. The Court emphasized the statutory mandate under Section 75(7) of the GST Act: "The amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice." The impugned order raised penalty and interest amounts beyond those indicated in the notice, violating Section 75(7). Furthermore, the petitioner was not properly served with the notice, having been unaware of its issuance. Accordingly, the Court quashed and set aside the order dated 30.12.2024 and remanded the matter to the Deputy Commissioner to provide the petitioner an opportunity to respond to the show-cause notice and to pass a fresh order in accordance with law after hearing.