GST Penalty Order Invalid as Amount Exceeds SCN Proposal: Allahabad HC

Shree Maa Saraswati Associates Vs State of U.P. and Another (Allahabad High Court)

The Penalty Imposed Far Exceeds The Penalty Proposed, The Impugned Order Is Without Jurisdiction, To That Extent Violation of The Mandatory Provision of Section 75(7) of The U.P.G.S.T. Act

The Allahabad High Court examined a penalty imposed under the U.P. GST Act where the adjudication order exceeded the amount proposed in the show cause notice. The show cause notice dated 20.09.2025 proposed a penalty of ₹2,91,620, whereas the adjudication order dated 29.12.2025 imposed a higher penalty of ₹3,24,240. The Court found this to be a clear violation of the mandatory provisions of Section 75(7) of the U.P.G.S.T. Act, which restricts authorities from imposing a penalty beyond what is proposed in the notice. It held that, to the extent the imposed penalty exceeded the proposed amount, the order was without jurisdiction. Considering this violation, the Court set aside the impugned order and remitted the matter back to the adjudicating authority for fresh consideration. The authority was directed to pass a new order after granting adequate opportunity of hearing to the petitioner, within a period of two months. The petitioner undertook to cooperate in the proceedings.

FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT

1. Having heard learned counsel for the petitioner and learned counsel for the revenue and having perused the record, it cannot be denied, there exists violation of the mandatory provision of Section 75(7) of the U.P.G.S.T. Act, 2017. Vide show cause notice dated 20.09.2025, penalty Rs. 2,91,620/- was proposed. However, vide adjudication order dated 29.12.2025, penalty Rs. 3,24,240/- had been imposed.

2. To the extent the provisions of Section 75(7) of the said Act is mandatory and further in the present facts, the penalty imposed far exceeds the penalty proposed, the impugned order is without jurisdiction, to that extent.

3. In view of such facts, no useful purpose would be served in keeping the present petition pending or calling for counter affidavit at this stage.

4. In view of the above, the impugned order is set aside. Matter is remitted to the adjudicating authority to pass a fresh order after giving adequate opportunity of hearing to the petitioner. Such proceedings may be concluded with a period of two months from today. Petitioner undertakes to cooperate in the proceedings.

5. Accordingly, the petition stands disposed of.