Tax, Interest & Penalty in GST Demand cannot Exceed Amount determined by Proper Officer: Allahabad HC Quashes Order [Read Order]
Section 75(7) of the Central Goods and Services Tax Act, 2017 mandates that the contents of the SCN and demand order match each other
Allahabad High Court, GST Demand, Tax, Penalty, Interest
Allahabad High Court, GST Demand, Tax, Penalty, Interest
The Allahabad High Court recently quashed a Goods and Services Tax (GST) assessment order and the consequential attachment while reiterating that no tax, interest and penalty can be imposed beyond the amount proposed in the show cause notice (SCN), the same being contrary to Section 75(7) of the Central Goods and Services Tax (CGST) Act, 2017.
The petitioner, M/s Chaurasiya Zarda Bhandar challenged an assessment order dated 29.08.2024 , which was affirmed in appeal after dismissing the petitioner’s plea on grounds of delay.
The facts follow a show-cause notice issued (SCN) to the petitioner-assessee, pertaining to the financial year 2019 - 20. The SCN proposed a tax liability of ₹29,07,002 on the petitioner and contained no proposal for imposition of interest or penalty.
Despite the contents of the SCN, the adjudicating authority proceeded to impose interest of ₹5,12,453 each under Central and State GST along with a penalty of ₹5,12,453 each under CGST and SGST, resulting in a total demand of ₹55,71,191.
The petitioner, represented by Rajesh Chandra Mishra and Shashwat Anand Dixit, contended that such an assessment violated the express statutory restriction under Section 75(7), which provides that no demand shall be confirmed on any other grounds than the ones specified in the relevant SCN.
Section 75 of the CGST Act
(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 grounds other than those specified in the notice.”
Meanwhile, Additional Chief Standing Counsel Sanjay Sarin could not dispute that the show cause notice that was issued to the petitioner lacked any reference towards the imposition of interest of penalty, however, the same has been imposed in the impugned order dated 29.08.2024 which apparently is against the provision of Section 75(7).
The Bench of Justice Manish Kumar observed that the assessment order dated 29.08.2024 was arbitrary and contrary to statutory provisions, and thus could not be sustained. Since the assessment order itself was quashed, the consequential attachment order was also set aside.
Consequently, the Allahabad High Court allowed the writ petition and remitted the matter to the adjudicating authority to pass fresh orders strictly in accordance with applicable law.
Accordingly, the writ petition was allowed.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
