M/S Super Industrial Store vs. Union Of INDIA And 4 Others
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The petitioner, M/s Super Industrial Store, is challenging an order dated 23.04.2024 passed by respondent no. 5, which raised a demand of Rs. 7,87,637/- for the financial year 2018-19. The petitioner had been issued a show-cause notice dated 16.12.2023 under Section 73 of the Goods and Services Tax Act, 2017, proposing a demand of Rs. 40,137/- towards tax, penalty, and interest. The petitioner did not file a response to this notice, nor did they appear. Consequently, the impugned order was passed, raising a significantly higher demand. The petitioner contends that this demand is contrary to the show-cause notice and violates Section 75(7) of the Act.
Held
The Court held that the demand raised in the impugned order dated 23.04.2024, amounting to Rs. 7,87,637/-, is ex facie contrary to the provisions of Section 75(7) of the Goods and Services Tax Act, 2017. Section 75(7) explicitly states that the amount of tax, interest, and penalty demanded in an 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. In this case, the show-cause notice indicated a demand of Rs. 40,137/-, whereas the final order raised a demand of Rs. 7,87,637/-. The Court found this discrepancy to be a clear violation of the statutory provision. The Court rejected the respondent's argument that the petitioner's failure to appear absolved them of this violation, emphasizing that the statutory mandate of Section 75(7) must be followed regardless of the petitioner's procedural default. Consequently, the impugned order could not be sustained. The Court quashed the order and remanded the matter back to respondent no. 5 to provide the petitioner an opportunity to file a response to the show-cause notice and pass a fresh order in accordance with law after providing a hearing.
Key Issues
1. Whether the demand raised in the order dated 23.04.2024, amounting to Rs. 7,87,637/-, is in excess of the amount specified in the show-cause notice dated 16.12.2023, thereby violating Section 75(7) of the Goods and Services Tax Act, 2017? Petitioner's arguments: The petitioner argued that the demand raised in the impugned order, which includes a total of Rs. 7,87,637/-, is substantially higher than the Rs. 40,137/- mentioned in the show-cause notice for tax, interest, and penalty. This, they contended, violates Section 75(7) of the Act, which prohibits demanding amounts in excess of those specified in the notice. They also argued that the demand confirmed was on grounds not specified in the notice. Respondent's arguments: The respondent argued that the petitioner failed to appear and file a response to the show-cause notice. Therefore, the passing of the order cannot be considered a violation of the principles of natural justice, and 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:55737-DB Chief Justice's Court Case :- WRIT TAX No. - 1645 of 2025 Petitioner :- M/s Super Industrial Store Respondent :- Union of India and 4 others Counsel for Petitioner :- Utkarsh Malviya Counsel for Respondent :- A.S.G.I., C.S.C., Saumitra Singh, Toshiva Singh, Ankur Agarwal (S.C.) Hon'ble Arun Bhansali, Chief Justice Hon'ble Kshitij Shailendra, J.
This petition is directed against the order dated 23.04.2024 passed by respondent no. 5 for financial year 2018-19, whereby a demand to the tune of Rs. 7,87,637/- has been raised against the petitioner.
The petitioner was issued a show-cause notice dated 16.12.2023 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. 40,137/- 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 23.04.2024 raising the demand as indicated hereinabove.
Learned counsel for the petitioner made submissions that action of the respondents in raising demand to the tune of Rs. 7,87,637/- which includes penalty to the tune of Rs. 47,021/- and interest to the tune of Rs. 3,69,844/- 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. 40,137/- against tax, interest and penalty
was sought to be recovered.
Learned Standing Counsel opposed the submissions made. Submissions have been made that the petitioner, despite issuance of notice, has chosen not to appear and file response and, therefore, passing of the order cannot be said to be in violation of principles of natural justice and, therefore, 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. 40,137/- as representing the tax, interest and penalty and the demand qua the three components has been raised at Rs. 7,87,637/-, 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 23.04.2024 (Annexure-1) is quashed and set aside and the matter is remanded back to the respondent no. 5 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 :- 16.4.2025 AHA/Sazia (Kshitij Shailendra, J) (Arun Bhansali, CJ) AFZAL HUSAIN ABBASI 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.