GST Order Demand Triples the Proposed Tax in SCN Without Prior Notice: Madras HC sets aside Order [Read Order]

The Madras High Court has set aside a GST ( Goods and Services Tax ) order that demanded over three times the tax proposed in the original show cause notice (SCN), holding that the order was passed in complete violation of natural justice and beyond the scope of the SCN.

The petitioner, M/s. Zigma Marketing (India) challenged the impugned assessment order dated 25.02.2025 and consequential notice dated 08.07.2025, contending that the original SCN dated 18.11.2024 sought ₹53,812 towards tax liabilities, but the final order abruptly demanded ₹1,64,143, an amount not proposed in the SCN nor intimated prior to the order.

This, the petitioner argued, deprived them of any opportunity to respond to the enhanced demand, rendering the proceedings unsustainable.

It was further submitted that the respondent acted without application of mind, as the final order travelled far beyond the scope of the SCN, violating the fundamental principle that an assessee must be put on notice for any adverse tax demand before it is confirmed. The respondent’s counsel conceded to the petitioner’s submissions and agreed that the matter could be remitted for reconsideration.

Justice Krishnan Ramasamy held that the enhanced tax demand, without prior notice or opportunity to respond, was impermissible. It observed that the impugned order suffered from procedural illegality, having been passed in breach of audi alteram partem.

Accordingly, the assessment order dated 25.02.2025 was quashed, and the matter was remanded to the respondent for fresh consideration. The Court directed that the petitioner may file a reply or objection with supporting documents within three weeks of receiving the order.

The Court also lifted the bank account attachment arising from the impugned order, directing the GST department to instruct the concerned bank to release the attachment immediately upon production of the Court’s order.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates