S R Construction Vs State of U.P. and another (Allahabad high Court)
In the case S R Construction vs. State of U.P. & Another, the Allahabad High Court addressed a critical issue under the Goods and Services Tax (GST) framework, ruling that a tax order imposing a higher demand than what was outlined in the initial show-cause notice (SCN) is contrary to the provisions of Section 75(7) of the GST Act, 2017. The petitioner was issued an SCN under Section 73 of the Act, demanding a total of ₹28,15,200, inclusive of tax, interest, and penalty. However, the final order, dated April 20, 2024, raised the demand to ₹59,27,500—more than double the amount mentioned in the SCN. The court found this to be a clear breach of Section 75(7), which mandates that any final demand order cannot exceed the amount or the grounds specified in the show-cause notice.
The petitioner challenged the validity of the order, highlighting that no proper opportunity for hearing was granted and that the date for reply and personal hearing was the same—February 27, 2024. Despite receiving a reminder dated April 1, 2024, the petitioner failed to respond or appear, leading to the issuance of the final order. The petitioner contended that even in such cases, legal safeguards under Section 75(7) must still be adhered to. The state, however, argued that interest and penalty charges are statutory and can be determined independently of the SCN content.
