Pavan Traders Vs State of U.P. And Another (Allahabad High Court)
Allahabad High Court has quashed a Goods and Services Tax (GST) demand of approximately ₹24.40 lakh raised against Pavan Traders for the financial year 2018-19. The court found that the demand significantly exceeded the amount specified in the initial show-cause notice, thereby violating Section 75(7) of the Goods and Services Tax Act, 2017.
The case arose from an order dated April 27, 2024, issued by respondent no. 2, imposing a total demand of ₹24,40,363.10, which included tax and penalty. Previously, on January 30, 2024, a show-cause notice (GST DRC-01) under Section 73 of the Act had been issued to Pavan Traders, proposing a tax, penalty, and interest imposition totaling ₹4,80,527. The petitioner reportedly did not respond to this notice. A reminder was subsequently issued on April 16, 2024, setting April 20, 2024, as the hearing date and deadline for reply. Despite this, no appearance was made by the petitioner, leading to the impugned order.
Counsel for Pavan Traders argued that the demand of ₹24,40,363.10, which included tax of ₹11,96,257.36 and penalty of ₹1,19,625.72, was “contrary to the show-cause notice” and a “violation of Section 75(7) of the Act.” This section explicitly states that “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 the grounds other than the grounds specified in the notice.” The petitioner’s counsel sought to have the order set aside and the matter remanded for a fresh opportunity of hearing.
