M/S Digital Universe vs. State Of U.P. And Another

Held

The Court held that the Adjudication Order dated December 20, 2023, was passed in gross violation of the mandatory statutory provisions of Section 75(7) of the UPGST Act, 2017, and the Central GST Act, 2017. The Court found that the provision of Section 75(7) is mandatory, and therefore, the Adjudication Order confirming a demand far in excess of that proposed in the show cause notice was without jurisdiction. The Court reasoned that once the legislature forbids the adjudicating authority from confirming a demand exceeding the proposed amount, it is impermissible for the authority to do so. The ratio decidendi is that an adjudicating authority cannot confirm a demand that exceeds the amount proposed in the show cause notice, as this violates mandatory statutory provisions. The impugned Adjudication Order was set aside, and the matter was remitted to the respondent No. 2 to pass a fresh order after giving due opportunity of hearing to the petitioner, preferably within three months.

Facts

The petitioner, M/s Digital Universe, challenged an Adjudication Order dated December 20, 2023, passed by Respondent No. 2 under Section 73 of the UPGST Act, 2017, for the Financial Year 2017-18. The show cause notice dated September 21/22, 2023, proposed a tax demand of Rs. 8,22,368.18, along with interest and zero penalty. However, the Adjudication Order confirmed a tax demand of Rs. 8,22,368.18, interest of Rs. 9,12,618, and a penalty of Rs. 82,236. The petitioner contended that this order was passed in gross violation of mandatory statutory provisions.

Key Issues

1. Whether the Adjudication Order dated December 20, 2023, confirming a demand in excess of that proposed in the show cause notice dated September 21/22, 2023, is valid in light of Section 75(7) of the UPGST Act, 2017 and the Central GST Act, 2017? Petitioner's contention: The petitioner argued that the Adjudication Order was passed in gross violation of the mandatory statutory provisions contained under Section 75(7) of the UPGST Act, 2017 and the Central GST Act, 2017. They asserted that the legislature has forbidden the adjudicating authority from confirming any demand in excess of that proposed, making the order without jurisdiction. Revenue's contention: The judgment records no specific argument from the revenue or State authorities regarding this issue.