Section 75(7) of the CGST Act mandates that a final tax order cannot demand an amount exceeding what was specified in the show cause notice (SCN), nor can it be based on new grounds not mentioned in the notice. The Allahabad High Court reaffirmed this principle in recent rulings. In M/s Vrinda Automation (14-05-2025), the Court quashed a GST order where the tax authority demanded Rs. 1.34 crore despite the SCN specifying Rs. 66.13 lakh, holding that adding unmentioned interest and penalty violated Section 75(7). Similarly, in M/s Sanjay Construction, the Court set aside an interest demand that was not quantified in the SCN. The department’s reliance on Section 75(9) was rejected, as it applies to omission of interest in the final order—not in the SCN. The rulings emphasize strict interpretation, procedural fairness, and the binding scope of SCNs in GST adjudication.
On the principle of strict interpretation, the Hon’ble Allahabad High Court quashed the order in respect to amount of interest which was not early mentioned in the SCN.
Section 75(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.
In the case of M/s VRINDA AUTOMATION the Hon’ble Allahabad High Court held vide order dated 14-05-2025
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.
On basis of the above provisions the order demanding of Rs.1,34,94,294.00 against the SCN indicating the amount of Rs.66,13,874.78 was not sustained because the amount of penalty and interest thereon is beyond the show cause notice, which is ex facie contrary to the provisions of Section 75(7) of the Act.
Further in the latest case of Sanjay Construction Thru. Authorised Representative Shivendra Kumar vs. State Of Uttar Pradesh, Writ Tax No. 161/2026, Date: 17-Feb-2026 the Hon’ble Allahabad High Court quashed the order in respect to demand of interest which was not quantified in the SCN issued.
The GST Authorities contended about application of Section 75(9) of Act, 2017. The Court dismissed this contention on the ground because it deals with the situation wherein the interest liability is not quantified in the order passed and not in the show cause notice.
Section 75(9) – The interest on the tax short paid or not paid shall be payable whether or not specified in the order determining the tax liability.
Author Views – It is temporally relief to the petitioners because in both cases the GST Authorities may proceed against the Petitioners according to law. Therefore, the Tax Payer should pay demand as per the order if it is correctly mentioned/determined in the order in spite of the fact it is not mentioned in the SCN.
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