Keshav Reddy Sweets Vs Assistant Commissioner of State Tax (Telangana High Court)
Telangana High Court – Excess Demand Beyond SCN: Keshav Reddy Sweets Allowed Rectification under Section 161 | W.P. No. 10287 of 2026 Disposed 07.04.2026
Telangana HC Holds Demand Cannot Exceed Show Cause Notice; Permits Rectification for Excess Tax Levy (AY 2018-19)
Introduction
One of the fundamental principles under GST adjudication is that a taxpayer cannot be subjected to a demand beyond what is proposed in the Show Cause Notice (SCN). Any deviation from this principle strikes at the root of natural justice and statutory safeguards.
In a significant ruling dated 07.04.2026, the Telangana High Court addressed such a discrepancy in the case of Keshav Reddy Sweets. The Court provided relief by allowing rectification of the demand, reinforcing that adjudication cannot travel beyond the scope of the SCN.
Case Background
The petitioner challenged:
- Order-in-Original dated 30.04.2024 for FY 2018-19
Key issue:
- Demand in SCN dated 30.01.2024: ₹1,54,866.11
- Demand in Order-in-Original: ₹5,53,983
Additionally:
- Tax liability imposed under CGST and SGST, though not proposed in SCN
- This resulted in a substantial increase in liability beyond notice
Key Legal Issue
Whether the tax authorities can:
- Confirm a demand higher than the amount specified in SCN, and
- Introduce new heads of tax (CGST/SGST) not proposed in the notice
in light of Section 75(7) of the CGST Act
