Whether an order can be passed on the basis of allegations which were not mentioned in Impugned SCN?

Whether an order can be passed on the basis of allegations which were not mentioned in the Impugned SCN?

The Hon’ble High Court of Jharkhand at Ranchi in M/s. CJ Darcl Logistics Limited v. Union of India [W.P.(T) No. 215 of 2022 decided on February 9, 2023] has quashed and set aside the Show Cause Notice (SCN) dated 17.05.2021 and the consequent orders in original dated 14.06.2021 and order in appeal dated 08.12.2021 demanding reversal of excess Input Tax Credit (ITC), stated that, as the impugned order of adjudication is bad in law for the reason that and it has been passed beyond of scope of SCN. Since, the SCN is vague and cryptic in nature and order in original has been passed beyond the scope of SCN, both are liable to be quashed and set aside.

It further transpires that the impugned proceedings are also vitiated for violation of principles of natural justice as neither a proper show cause notice has been issued nor any opportunity of hearing was given to the petitioner. It is also now well settled that before adjudicating any issue which is against the interest of assessee; opportunity of hearing should be granted to him. In the instant case, had there been any opportunity given to the petitioner, the respondents might have proceeded to issue a subsequent show cause. At the cost of repetition, it is stated that it is only after the submissions of petitioner’s reply, the Adjudicating Officer decided the refund application on the grounds which were not part of the show cause notice i.e. related to maintaining of two GSTIN number: one under RCM and other under forward charge mechanism (FCM) with two different rates of GST to be charged upon the services being provided.

The Hon’ble Court observed that it is settled principle of law that if an allegation or ground is not made at the time of issuance of show cause notice, the authority cannot go beyond the scope of show cause notice to create new ground at the later stage of adjudication.

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