Svas Lifesciences Private Limited Vs State of U.P. and Another (Allahabad High Court)
Summary: The Allahabad High Court considered a challenge to an adjudication order dated 13.02.2025 passed under Section 73 of the UPGST Act, 2017 and the Central GST Act, 2017 for Financial Year 2020-21.
The show cause notice dated 08.11.2024 proposed confirmation of a tax demand of Rs. 39,557.159/-. However, the subsequent adjudication order confirmed tax demand of Rs. 39,557.159/- together with penalty of Rs. 40,000/-. The petitioner challenged the adjudication order on the ground that the demand confirmed exceeded the demand proposed in the show cause notice.
The Court found that the impugned adjudication order had been passed in gross violation of the mandatory statutory provisions contained in Section 75(7) of the UPGST Act, 2017 and the Central GST Act, 2017. Section 75(7) provides a statutory restriction on the amount that may be demanded through the adjudication order. The provision requires that the amount of tax, interest and penalty demanded in the order shall not exceed the amount specified in the notice and that no demand shall be confirmed on grounds other than those specified in the notice.
The High Court held that, since Section 75(7) is mandatory, an adjudication order confirming a demand far in excess of the demand proposed in the show cause notice is without jurisdiction. The Court further observed that once the legislature has prohibited the adjudicating authority from confirming any demand in excess of that proposed, the authority cannot assume jurisdiction to confirm such excess demand.
Finding a fundamental illegality on the face of the record, the Court considered that no useful purpose would be served by keeping the writ petition pending or calling for a counter affidavit at that stage. Accordingly, the impugned adjudication order dated 13.02.2025 was set aside.
The matter was remitted to respondent no. 2 to pass a fresh order after giving due opportunity of hearing to the petitioner, as expeditiously as possible and preferably within three months. The petitioner undertook not to seek any undue or long adjournments. The writ petition was consequently disposed of.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Ayush Kumar Mishra, learned counsel for the petitioner and Sri Ankur Agarwal, learned counsel for the UPGST authorities.
2. Upon hearing and perusal of the record, it cannot be disputed that the impugned Adjudication Order dated 13.02.2025 has been passed in gross violation of the mandatory statutory provisions contained under Section 75(7) of the UPGST Act, 2017 and the Central GST Act, 2017. Thus, the show cause notice dated 08.11.2024 proposed to confirm tax demand of Rs. 39,557.159/-. Against that vide Adjudication Order dated 13.02.2025 passed by the respondent no. 2 under Section 73 of the Act for the Financial Year 2020-21, tax demand of Rs. 39,557.159/- and penalty of Rs. 40,000/- has been confirmed.
3. In view of the fact that the provision of Section 75(7) of the Act is mandatory, clearly the Adjudication Order passed confirming the demand far in excess of the demand proposed is without jurisdiction.
4. In view of the above, fundamental illegality made out in face of the record, no useful purpose may be served in keeping the present writ petition pending or calling for counter affidavit at this stage. Once the legislature has forbid the adjudicating authority from confirming any demand in excess of that proposed, it may never became open to the adjudicating authority to confirm the demand in excess of that proposed.
5. Accordingly, the the impugned Adjudication Order dated 13.02.2025 is set aside. The matter is remitted to the respondent no. 2 to pass a fresh order, after giving due opportunity of hearing to the petitioner, as expeditiously as possible, preferably within a period of three months from today.
6. The petitioner undertakes not to take any undue or long adjournments.
7. Accordingly, the writ petition is disposed of.
