In a significant ruling reinforcing the principles of natural justice under GST law, the Allahabad High Court in [2025] 176 taxmann.com 533 held that a tax authority cannot raise a demand exceeding the amount specified in the Show Cause Notice (SCN). The Court observed that such action deprives the assessee of a fair opportunity to respond and violates the statutory safeguards built into adjudication proceedings. The case involved a discrepancy between the amount proposed in the SCN and the final amount demanded in the adjudication order, prompting the Court to remand the matter back to the authorities for reconsideration. This judgment underscores the importance of procedural fairness and adherence to due process in GST adjudications.
📌 Citation:
[2025] 176 taxmann.com 533 (Allahabad)
Date of Judgment: 10 July 2025
Court: Allahabad High Court
Legal Domain: Goods and Services Tax (GST)
🧾 Case Summary:
The High Court held that a demand cannot be raised in excess of the amount specified in the Show Cause Notice (SCN). If the final order imposes a higher liability than what was proposed in the SCN, it violates the principles of natural justice.
⚖️ Facts of the Case:
- The department issued a Show Cause Notice (SCN) indicating a proposed demand of ₹23,69,062.50 towards tax, interest, and penalty.
- However, the final order raised the demand to ₹41,84,920, significantly higher than what was indicated in the SCN.
🧑⚖️ High Court’s Ruling:
- The court found this to be a clear breach of the SCN mechanism, as the assessee was not given notice or opportunity to defend against the higher demand.
- Accordingly, the matter was remanded back to the adjudicating authority to pass a fresh order in accordance with law and after giving proper opportunity to the assessee.
📝 Legal Principle Affirmed:
Demand in the final order cannot exceed the quantum proposed in the SCN. Doing so would contravene natural justice and procedural fairness under GST laws.