GST Demand Order Set Aside for Exceeding Show Cause Notice Amount

Ukas Goods Carrier Vs Union Territory of JK & Ors. (Jammu & Kashmir High Court)

M/s Ukas Goods Carrier, a Goods and Transport Agency (GTA), filed a writ petition under Article 226 of the Constitution of India challenging a show cause notice dated 6 February 2021 and a consequential demand order dated 26 August 2021 issued by the assessing authority under the Goods and Services Tax Act, 2017. The petitioner contended that the orders were issued without jurisdiction and contrary to the statutory provisions of the GST Act.

The petitioner argued that a GTA providing transportation services is not liable to pay tax under Section 2(98) and Section 9(3) of the GST Act, as tax liability in such cases lies solely on the service recipient under the reverse charge mechanism. The petitioner further challenged the demand order issued under Section 74(9) on the ground that the tax, interest, and penalty demanded exceeded the amounts specified in the earlier show cause notice issued under Section 74(1). The petitioner asserted that this contravenes Section 75(7) of the GST Act, which prohibits confirmation of any demand exceeding the amount stated in the show cause notice or on grounds other than those specified in the notice.