M/S Vibhuti Tyres vs. State Of U.P. And Another
Original PDF →Facts
The petitioner, M/s Vibhuti Tyres, is challenging an order dated 18.11.2023 passed by respondent no. 2, which raised a demand of Rs. 32,97,336/- for the period July 2017 to March 2018. The petitioner had been issued a show-cause notice dated 29.09.2023 under Section 73 of the Goods and Services Tax Act, 2017, proposing a demand of Rs. 8,81,080/- towards tax, penalty, and interest. The petitioner did not file a response to this notice, nor did they appear before the authority, leading to the impugned order being passed. The petitioner contends that the final demand raised significantly exceeds the amount mentioned in the show-cause notice.
Held
The Court held that the demand raised in the impugned order dated 18.11.2023, amounting to Rs. 32,97,336/-, is ex facie contrary to the provisions of Section 75(7) of the Goods and Services Tax Act, 2017. This sub-section clearly stipulates that the amount of tax, interest, and penalty demanded in the order shall not exceed the amount specified in the notice, and no demand shall be confirmed on grounds other than those specified in the notice. The Court noted that the show-cause notice indicated a total demand of Rs. 8,81,080/-, while the final order raised a demand of Rs. 32,97,336/-. This discrepancy constitutes a clear violation of Section 75(7). Consequently, the Court found that the impugned order could not be sustained. The writ petition was allowed, the order dated 18.11.2023 was quashed and set aside, and the matter was remanded back to respondent no. 2 to provide the petitioner an opportunity to file a response to the show-cause notice and thereafter pass a fresh order in accordance with law.
Key Issues
1. Whether the demand raised in the final order, amounting to Rs. 32,97,336/-, is contrary to the show-cause notice dated 29.09.2023, which proposed a demand of Rs. 8,81,080/-, thereby violating Section 75(7) of the Goods and Services Tax Act, 2017? The petitioner argued that the final demand, which includes a significantly higher amount for tax, interest, and penalty, is in direct violation of Section 75(7) of the Act, as it exceeds the amount specified in the show-cause notice. They contended that the demand should not be confirmed on grounds other than those specified in the notice. The respondent State argued that the charging of interest and penalty is statutory. They contended that even if these components were not explicitly detailed in the show-cause notice, the authority retains the power to demand them in accordance with the law. Therefore, they argued, the petition should be dismissed.
Sections Cited
Section 73, Section 75(7)
AI-generated summary — verify with the full judgment below
Neutral Citation No. - 2025:AHC:74043-DB Chief Justice's Court Case :- WRIT TAX No. - 2055 of 2025 Petitioner :- M/S Vibhuti Tyres Respondent :- State of U.P. and Another Counsel for Petitioner :- Ajay Kumar Kashyap,Ravindra Kumar Rastogi Counsel for Respondent :- C.S.C. Ankur Agarwal (SC) Hon'ble Arun Bhansali,Chief Justice Hon'ble Kshitij Shailendra,J.
This petition is directed against the order dated 18.11.2023 passed by respondent no. 2 for the period July 2017 to March 2018, whereby a demand to the tune of Rs. 32,97,336/- has been raised against the petitioner.
The petitioner was issued a show-cause notice dated 29.09.2023 under Section 73 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. 8,81,080/- be not imposed. Apparently, petitioner did not file any response to the said show-cause notice. As no appearance was made, the same led to passing of the order dated 18.11.2023 raising the demand as indicated herein-above.
Learned counsel for the petitioner made submissions that action of the respondents in raising demand to the tune of Rs. 32,97,336/- which includes penalty to the tune of Rs. 1,54,898/- and interest to the tune of Rs. 15,93,456/- 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. 8,81,080/- 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, 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. 8,81,080/- as representing the tax, interest and penalty and the demand qua the three components has been raised at Rs. 32,97,336/-, 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 18.11.2023 (Annexure-5) 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. Order Date :- 7.5.2025 RK (Kshitij Shailendra, J) (Arun Bhansali, CJ) RAJESH KUMAR 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.