Vrinda Automation Vs State of Uttar Pradesh and another (Allahabad High Court)
Allahabad High Court recently set aside a significant Goods and Services Tax (GST) demand against M/s Vrinda Automation, asserting that a final demand cannot exceed the amount specified in the initial show-cause notice. The ruling, delivered in the case of Vrinda Automation Vs State of Uttar Pradesh and another, underscores the critical importance of adherence to procedural fairness outlined in the GST Act, 2017.
The dispute arose from a demand order dated December 30, 2024, issued by the Deputy Commissioner, State Tax, Ghaziabad, which sought Rs. 1,34,94,294/- from Vrinda Automation for the period of April 2019 to March 2020. This substantial demand included tax, a penalty of Rs. 45,79,228/-, and interest amounting to Rs. 43,35,838/-.
However, the petitioner, Vrinda Automation, argued that the initial show-cause notice (GST DRC-01) dated November 25, 2023, issued under Section 74 of the GST Act, had specified a much lower proposed demand of Rs. 66,13,874.78, encompassing tax, penalty, and interest. The company contended that the final demand order was nearly double the amount indicated in the show-cause notice, thereby violating Section 75(7) of the GST Act.
Furthermore, the petitioner claimed that the show-cause notice was merely uploaded on the official portal under the ‘Additional Notice and Order’ tab and was never formally communicated through any other mode. This alleged lack of proper communication rendered the petitioner unaware of the notice, preventing them from filing a timely response, which subsequently led to the ex-parte passing of the demand order.
