Chaurasiya Zarda Bhandar Vs State of U.P. (Allahabad High Court)
The petitioners challenged the order dated 29 September 2025 by which their appeal was dismissed on the ground of delay, resulting in the affirmation of the assessment and demand order dated 29 August 2024. The main contention raised was that the show cause notice issued for the financial year 2019–20 reflected only a tax liability of ₹29,07,002 and required the petitioners to explain why that amount should not be recovered. According to the petitioners, the notice did not contain any proposal for levying interest or penalty, and the outstanding amount mentioned was limited to the stated tax figure. The petitioners relied on Section 75(7) of the GST Act to argue that the tax, interest, and penalty demanded in the final order cannot exceed the amount determined by the proper officer in the show cause notice and that no demand can be confirmed on grounds not specified in the notice.
It was argued that despite the absence of any proposal for interest or penalty in the show cause notice, the order dated 11 February 2025 imposed interest of ₹5,12,453 each under CGST and SGST and penalty of ₹5,12,453 each under CGST and SGST, resulting in a total demand of ₹55,71,191. The State’s counsel did not dispute that the show cause notice lacked any reference to interest or penalty, although these amounts were included in the assessment order. The Court held that the imposition of such amounts without prior notice was contrary to Section 75(7) and rendered the assessment order arbitrary and unsustainable.
