Re Sustainability Limited vs. The State Of Madhya Pradesh
Held
The High Court declined to entertain the writ petition, relegating the petitioner to prefer an appeal before the Appellate Authority as the impugned order is appealable under Section 107 of the CGST Act, 2017. However, the Court found prima facie substance in the petitioner's argument that, by virtue of Section 75 of the CGST Act, 2017, the demand raised in the order-in-original cannot exceed the demand made in the show cause notice (SCN). Therefore, the Court held that any demand over and above the SCN amount is unsustainable. The Court directed that this issue, along with the question of whether the petitioner is required to deposit 10% of the demand mentioned in the SCN or the total demand assessed in the order-in-original, be decided by the Appellate Authority. The Court also permitted the petitioner to file the appeal physically along with an application for deposit of 10% of the SCN demand.
Facts
The petitioner, Sustainability Limited, challenged an order dated 17.04.2025 passed by the State Tax Officer, Jabalpur, under Section 74 of the CGST Act, 2017. This order imposed a total liability of Rs. 2,13,26,524/- on the petitioner. The petitioner contended that the show cause notice (SCN) in form GST DRC-01 dated 06.08.2024 had indicated a total demand of tax, penalty, and interest of only Rs. 1,63,68,250/-. The petitioner argued that, as per Section 75 of the CGST Act, 2017, the Assessing Authority cannot pass an order for a demand exceeding the amount specified in the SCN. The petitioner also noted that they are required to deposit only 10% of the demand mentioned in the SCN, not the full assessed demand.
Key Issues
1. Whether the Assessing Authority, in passing an order under Section 74 of the CGST Act, 2017, can impose a demand exceeding the amount mentioned in the show cause notice (SCN) dated 06.08.2024, contrary to the provisions of Section 75 of the CGST Act, 2017? Petitioner's Contention: The petitioner argued that the impugned order imposing a demand of Rs. 2,13,26,524/- is unsustainable as it exceeds the demand of Rs. 1,63,68,250/- stated in the SCN. They relied on Section 75 of the CGST Act, 2017, which they interpreted to mean that the Assessing Authority cannot exceed the demand specified in the SCN. They also highlighted that they are only required to deposit 10% of the SCN demand. Revenue's Contention: The judgment does not record any specific arguments from the respondents/State regarding this issue.
Sections Cited
Section 74, Section 75, Section 107
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORDER Per: Justice Vivek Rusia By way of present writ petition under Article 226 of the Constitution of India, the petitioner is challenging the order dated 17.04.2025 (Annexure P/3) passed under Section 74 of Central Goods and Services Tax Act, 2017 (hereinafter referred to as the "CGST Act, 2017") by respondent No.2/State Tax Officer, Jabalpur-4, Jabalpur Division-1, Jabalpur Zone (M.P.), whereby total liability of Rs.2,13,26,524/- has been imposed upon the petitioner.
Although, the aforesaid order is appealable under Section 107 of CGST Act, 2017, but the petitioner has filed this petition inter-alia on the ground that in the show cause notice in form GST DRC-01 dated 06.08.2024, total demand of the tax liability with penalty interest was only Rs.
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