M/S Mani Enterprises vs. State Of U.P. And Another
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HIGH COURT OF JUDICATURE AT ALLAHABAD WRIT TAX No. - 4962 of 2025 Court No. - 3 HON'BLE SHEKHAR B. SARAF, J. HON'BLE PRAVEEN KUMAR GIRI, J.
This petition is directed against the order dated 21.03.2025 passed by respondent no. 2 for the period April 2022 to March 2023 (F.Y. 2022- 2023) whereby a demand to the tune of Rs. 20,61,38,473.46 has been raised against the petitioner.
The petitioner was issued a show-cause notice dated 21.11.2024 under Section 74 of Goods and Services Tax Act, 2017 (hereinafter referred to as 'the Act') in GST DRC-01. The notice, inter alia, called upon the petitioner as to why tax, penalty and interest to the tune of Rs. 20,10,99,082.50 be not imposed reminders were also issued. Apparently, petitioner filed response to the said show-cause notice on 07.03.2025 and prayed for adjournment. After 14 days, the order dated 21.03.2025 raising the demand as indicated herein-above has been passed.
Learned counsel for the petitioner made submissions that action of the respondents in raising demand to the tune of Rs. 20,61,38,473.46/- which includes penalty to the tune of Rs. 84452638/- and interest to the tune of Rs. 3,72,33,197/- is contrary to the show-cause notice issued to the petitioner and in violation of Section 75(7) of the Act inasmuch the same is beyond the show-cause notice wherein a demand to the tune of Rs. 20,10,99,082.50 against tax, interest and penalty was sought to be recovered.
Learned Standing Counsel opposed the submissions made. Submissions were made that charging interest and penalty is statutory and, therefore, Versus Counsel for Petitioner(s) : Aditya Pandey Counsel for Respondent(s) : C.S.C. M/S Mani Enterprises .....Petitioner(s) State of U.P. and Another .....Respondent(s)
irrespective of the fact that the same has not been indicated in the show- cause notice, would not take away the power of the authority in demanding the interest and penalty in accordance with law and on that count, the petition deserves dismissal.
We have considered the submissions made by counsel for the parties and have perused the material available on record.
Provisions of Section 75(7), inter alia, read as under: "(7) 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."
A perusal of the above would reveal that Section 75 deals with general provisions relating to determination of tax and sub-section (7) specifically stipulates that 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.
Admittedly, in the present case, the show-cause notice merely indicates the amount of Rs. 20,10,99,082.50 as representing the tax, interest and penalty and the demand qua the three components has been raised at Rs. 20,61,38,473.46/-, which is ex facie contrary to the provisions of Section 75(7) of the Act.
In view of the above discussion, 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 21.03.2025 (Annexure-1) is quashed and set aside and the matter is remanded back to the respondent no. 2 to provide an opportunity to the petitioner to file response to the show-cause notice and after providing opportunity of hearing, pass a fresh order in accordance with law. September 25, 2025 K.K. Maurya WTAX No. 4962 of 2025 2 (Praveen Kumar Giri,J.) (Shekhar B. Saraf,J.) KAMLESH KUMAR MAURYA High Court of Judicature at Allahabad
Reproduced from the public record of the Allahabad High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.