Case Law Details
Round Pay Voice Tech Vs State of U.P. (Allahabad High Court)
Material Facts:The petitioner challenged an order dated 05.02.2025 raising a GST demand of ₹59.20 crore for the period July 2017 to March 2018. Earlier, a show cause notice dated 07.05.2022 under Section 74 of the GST Act had proposed recovery of ₹57.60 crore towards tax, interest and penalty.
Legal Issue: Whether the adjudication order could raise a demand exceeding the amount specified in the show cause notice in view of Section 75(7) of the GST Act.
Parties’ Submissions: The petitioner contended that the demand of ₹59.20 crore, including penalty of ₹29.60 crore, exceeded the amount proposed in the show cause notice and violated Section 75(7). The State submitted that levy of interest and penalty is statutory and could be demanded in accordance with law even if not specifically indicated in the show cause notice.
Court’s Findings: The High Court observed that Section 75(7) expressly provides that the amount of tax, interest and penalty demanded in the order shall not exceed the amount specified in the notice. Since the show cause notice specified ₹57.60 crore while the final order demanded ₹59.20 crore, the order was ex facie contrary to Section 75(7).
Final Ruling: The High Court quashed the order dated 05.02.2025 and remanded the matter to the adjudicating authority to permit the petitioner to respond to the show cause notice and, after granting a hearing, pass a fresh order in accordance with law.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. This petition is directed against the order dated 05.02.2025 passed by respondent no.3 for the period July, 2017 to March 2018 whereby a demand to the tune of Rs.59,20,00,000/- has been raised against the petitioner.
2. The petitioner was issued a show-cause notice dated 07.05.2022 under Section 74 of Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the Act’) in GST DRC-01. The notice, inter alia, called upon the petitioner as to why tax, penalty and interest to the tune of Rs.57,60,00,000/- be not imposed. Thereafter the order dated 05.02.2025 raising the demand as indicated herein-above has been passed.
3. Learned counsel for the petitioner made submissions that action of the respondents in raising demand to the tune of Rs.59,20,00,000/- which includes penalty to the tune of Rs.29,60,00,000/- is contrary to the show-cause notice issued to the petitioner and in violation of Section 75(7) of the Act inasmuch the same is beyond the show-cause notice wherein a demand to the tune of Rs.57,60,00,000/- against tax, interest and penalty was sought to be recovered.
4. Learned Standing Counsel opposed the submissions made. Submissions were made that charging interest and penalty is statutory and, therefore, irrespective of the fact that the same has not been indicated in the show-cause notice, would not take away the power of the authority in demanding the interest and penalty in accordance with law and on that count, the petition deserves dismissal.
5. We have considered the submissions made by counsel for the parties and have perused the material available on record.
6. Provisions of Section 75(7), inter alia, read as under:
“(7) 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 the grounds other than the grounds specified in the notice.”
7. A perusal of the above would reveal that Section 75 deals with general provisions relating to determination of tax and sub-section (7) specifically stipulates that 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 the grounds other than the grounds specified in the notice.
8. Admittedly, in the present case, the show-cause notice merely indicates the amount of Rs. 57,60,00,000/- as representing the tax, interest and penalty and the demand qua the three components has been raised at Rs.59,20,00,000/-, which is ex facie contrary to the provisions of Section 75(7) of the Act.
9. In view of the above discussion, on account of violation of provisions of Section 75(7) of the Act, the order impugned cannot be sustained.
10. Consequently, the writ petition is Order dated 05.02.2025 is quashed and set aside and the matter is remanded back to the respondent no. 3 to provide an opportunity to the petitioner to file response to the show-cause notice and after providing opportunity of hearing, pass a fresh order in accordance with law.
Author Bio
