Sanjay Construction Vs State of U.P. (Allahabad High Court)
The Allahabad High Court heard a writ petition filed under Article 226 of the Constitution challenging an order dated 14 February 2025 passed under Section 73(9) of the Goods and Services Tax Act, 2017. The impugned order imposed tax, interest, and penalty liability amounting to ₹1,02,58,921.42 on the petitioners.
The petitioners argued that the show cause notice issued by the GST authorities did not quantify any interest for the period April 2020 to March 2021, although the impugned order imposed such interest along with tax and penalty. They relied on Section 75(7) of the GST Act, which states that the amount of tax, interest, and penalty demanded in an order cannot exceed the amount specified in the show cause notice, and no demand can be confirmed on grounds other than those specified in the notice.
The GST authorities contended that interest would still be payable even if it was not mentioned in the show cause notice and relied on Section 75(9) of the Act, which provides that interest on tax short paid or not paid shall be payable whether or not specified in the order determining tax liability.
The Court examined the provisions and observed that the authorities were aware of the relevant period when the show cause notice was issued on 29 November 2024 but had not quantified the interest in the notice. The Court held that inclusion of interest liability in the adjudication order without specifying it in the show cause notice was contrary to Section 75(7).
