Facts of the Case

M/S Mani Enterprises challenged an order dated 21.03.2025 raising a GST demand of Rs 20,61,38,473.46/- for the period April 2022 to March 2023. A show cause notice dated 21.11.2024 under Section 74 of the GST Act (Form GST DRC-01) had proposed tax, interest and penalty totalling Rs 20,10,99,082.50/-. The petitioner had responded on 07.03.2025 seeking an adjournment, and the impugned order followed fourteen days later, confirming a demand more than Rs 50 lakh higher than what the notice had proposed — including a penalty component of Rs 8,44,52,638/- and interest of Rs 3,72,33,197/-.

Issues Involved

  1. Whether an adjudication order under Section 74 can confirm a demand exceeding the amount specified in the underlying show cause notice.
  2. Whether the statutory bar in Section 75(7) applies irrespective of the Department's argument that interest and penalty are statutorily payable regardless of the figures stated in the notice.

Petitioner's Arguments

  • The final demand of Rs 20,61,38,473.46/- was ex facie contrary to the show cause notice, which had proposed only Rs 20,10,99,082.50/-, in violation of Section 75(7) of the Act.

Respondent's Arguments

  • Charging interest and penalty is a statutory obligation; the fact that the exact figures were not indicated in the show cause notice does not take away the authority's power to demand interest and penalty in accordance with law.

Court Order / Findings

  • Section 75(7) expressly provides 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 grounds other than those specified in the notice.
  • It was undisputed that the show cause notice indicated Rs 20,10,99,082.50/- as the total of tax, interest and penalty, while the final order raised the demand to Rs 20,61,38,473.46/-, which is ex facie contrary to Section 75(7).
  • On account of this statutory violation, the impugned order could not be sustained and was quashed and set aside.
  • The matter was remanded to the respondent to provide the petitioner a fresh opportunity to respond to the show cause notice and, after a hearing, pass a fresh order in accordance with law.

Important Clarification

  • Section 75(7) is a hard statutory ceiling: the final demand confirmed in an adjudication order can never exceed, in quantum or in the grounds relied upon, what was specified in the show cause notice — even interest and penalty components must stay within the notice's figures.
  • A generic argument that interest/penalty are statutorily payable regardless of the notice's figures does not override the express text of Section 75(7).

Sections Involved

  • Section 74, CGST Act, 2017 — determination of tax involving fraud, wilful misstatement or suppression.
  • Section 75(7), CGST Act, 2017 — bar on confirming a demand exceeding the notice, or on grounds beyond those specified in the notice.

Decision – In Favour of

In favour of the Assessee — the demand order is quashed for violating Section 75(7) and the matter remanded for fresh adjudication.

Case Details

High Court of Judicature at Allahabad; Writ Tax No. 4962 of 2025; Coram: Hon'ble Shekhar B. Saraf, J. and Hon'ble Praveen Kumar Giri, J.; Order dated 25.09.2025.

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.