Capital Furniture House & Engineering Works Vs Commissioner of State Tax (Allahabad High Court)
Summary: The Allahabad High Court set aside the adjudication order dated 30.01.2025 passed against Capital Furniture House & Engineering Works for Financial Year 2017-18 after finding that the order confirmed a demand in excess of the amount proposed in the show cause notice. The show cause notice dated 05.08.2024 proposed tax demand of Rs. 96,000/- and penalty of Rs. 20,000/-. However, the adjudication order dated 30.01.2025 passed under Section 74 of the UPGST Act, 2017 and the Central GST Act, 2017 confirmed tax demand of Rs. 96,000/- and penalty of Rs. 96,000/-. The Court held that Section 75(7) of the UPGST Act, 2017 and the Central GST Act, 2017 is mandatory and prohibits confirmation of a demand in excess of the amount proposed. It therefore held that the impugned adjudication order, to the extent it confirmed the demand beyond the proposal, was without jurisdiction. The Court accordingly set aside the adjudication order and remitted the matter to respondent no. 2 to pass a fresh order after giving due opportunity of hearing to the petitioner, preferably within three months. The petitioner undertook not to seek any undue or long adjournments. The writ petition was disposed of.
The Court held that the provision of Section 75(7) of the Act is mandatory. Since the adjudication order confirmed the demand beyond the demand proposed in the show cause notice, the Court held that the order was without jurisdiction.The principle involved is also reflected in TaxGuru’s discussion of GST adjudication under Section 75 of the CGST Act, particularly the statutory restriction governing the amount and grounds of demand at the adjudication stage.
The issue of an adjudication order travelling beyond the show cause notice has also been addressed in TaxGuru’s coverage of Vrinda Automation Vs State of Uttar Pradesh and another (Allahabad High Court) and Unique Computer & Communication Shop Vs State of U.P. and another (Allahabad High Court).
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Mr. Adarsh Singh, learned counsel for the petitioner and Sri Rishi Kumar, learned Additional Chief Standing Counsel for the UPGST authorities.
2. Upon hearing and perusal of the record, it cannot be disputed that the impugned Adjudication Order dated 30.01.2025 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 05.08.2024 proposed to confirm tax demand of Rs. 96,000/- and penalty of Rs. 20,000/-. Against that vide Adjudication Order dated 30.01.2025 passed by the respondent no. 2 under Section 74 of the Act for the Financial Year 2017-18, tax demand of Rs. 96,000/- and penalty of Rs. 96,000/- 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 30.01.2025 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.
