Shri Ram Trading Company Situated Vs State of U.P. and Another (Allahabad High Court)
In M/s Shri Ram Trading Company vs. State of U.P. (Writ Tax No. 3043 of 2025), the Allahabad High Court clarified an important procedural safeguard under GST: the tax department cannot raise a demand exceeding the amount specified in the Show Cause Notice (SCN). The dispute arose when an order dated April 5, 2025, raised a demand of ₹41.84 lakh, whereas the original SCN issued on November 20, 2024, proposed a demand of only ₹23.69 lakh.
Despite receiving a reminder and being given a hearing date, the petitioner did not respond or appear before the adjudicating authority. However, the final order was passed with a significantly higher demand. The petitioner challenged this on the ground that it violated Section 75(7) of the CGST Act, 2017, which states:
“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 grounds other than the grounds specified in the notice.”
The Hon’ble High Court held that the impugned order clearly breached this provision. It emphasized that the law does not permit authorities to enhance the liability or introduce new grounds at the adjudication stage unless they are first mentioned in the SCN. Accordingly, the order was quashed, and the matter was remanded for fresh adjudication after providing the petitioner a fair opportunity to respond.
