Sai Computers Vs State of U.P. (Allahabad High Court)
The Allahabad High Court addressed a petition filed by Sai Computers, which challenged an order dated 28.08.2024, issued by Respondent No. 2, raising a total demand of Rs. 155,878.26 for the period covering July 2017 to March 2018 (F.Y. 2019-20).
The record showed that the petitioner was initially issued a show-cause notice (SCN) under Section 74 of the Goods and Services Tax Act, 2017 (the Act), wherein the proposed demand for tax, penalty, and interest was Rs. 20,916.90. After the petitioner filed a response to the SCN on 27.05.2024, the final order dated 28.08.2024 was issued. The petitioner contested this order, arguing that the final demand of Rs. 155,878.26—which included Rs. 20,000 in penalty and Rs. 63,737 in interest—was contrary to the amount specified in the show-cause notice and violated Section 75(7) of the Act.
The Standing Counsel opposed this view, arguing that the charges for interest and penalty are statutory and that the authority retains the power to demand them in accordance with law, regardless of whether they were fully indicated in the SCN.
The Court’s decision centered on the interpretation of Section 75(7) of the Act. This provision explicitly mandates that the amount of tax, interest, and penalty demanded in the final order “shall not be in excess of the amount specified in the notice” and that demands cannot be confirmed on grounds other than those specified in the notice.
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