Tvl.Vasantham Recharge vs. The State Tax Officer

Facts

The petitioner, Tvl. Vasantham Recharge, represented by its Proprietor P. Karthikeyan, filed three writ petitions (W.P.(MD)Nos. 2373 to 2375 of 2025) before the Madurai Bench of the Madras High Court. These petitions challenged orders dated 25.11.2024, issued by the respondent, The State Tax Officer, Roving Squad-1, Erode. The impugned orders pertained to the tax periods 2020-21, 2021-22, and 2022-23. The petitioner sought to quash these orders, alleging illegality, lack of jurisdiction, and violation of natural justice. The core of the petitioner's grievance was that the final orders passed by the respondent went beyond the scope of the show cause notices previously issued.

Held

The Court held that the impugned orders were indeed beyond the scope of the show cause notice. A perusal of the orders confirmed that while the show cause notice was issued under Section 73 of the GST Act, the impugned orders were passed under Section 74 of the Act. Additionally, the Court noted that no penalty was calculated in the show cause notice, but penalties were levied in the impugned orders. The Court found this to be a violation of the principles of natural justice and statutory procedure. Consequently, the Court set aside the impugned orders. The matter was remitted back to the respondent with a direction to pass fresh orders on merits and in accordance with law. The respondent was explicitly instructed to confine the proceedings to the scope of the original show cause notice issued to the petitioner and to afford the petitioner an opportunity of hearing. The Court expressly left undecided any issues beyond the scope of the show cause notice.

Key Issues

1. Whether the impugned orders passed by the respondent are beyond the scope of the show cause notice issued to the petitioner, thereby violating principles of natural justice and statutory provisions? (Section 73, Section 74 of the CGST Act, 2017) Petitioner's Contention: The learned counsel for the petitioner argued that the impugned orders were passed beyond the scope of the show cause notice. Specifically, the show cause notice was issued under Section 73 of the GST Act, but the final orders invoked Section 74 of the Act. Furthermore, the petitioner contended that the show cause notice did not mention any penalty, whereas the impugned orders levied penalties. The petitioner relied on the principle that a final order must be confined to the allegations raised in the show cause notice. Revenue's Contention: The judgment does not record any specific arguments or contentions made by the respondent (Revenue).