It has been frequently observed that adjudicating authorities are issuing final orders that go beyond the scope of the Show Cause Notice (SCN). Specifically, there are instances where the demand in the final order exceeds the amount mentioned in the SCN, or where the grounds or reasons stated in the SCN do not align with those in the final order. This raises a significant question: how should such orders be addressed under the law?
For a quick reference, section 75(7) of the CGST Act, 2017 is reproduced below:
“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.”
Based on the above section, it is clear that the orders should not exceed the scope outlined in the Show Cause Notice (SCN).
A similar case was brought before the Honourable High Court of Telangana, where the court upheld the same principle, stating that the order must not exceed the scope of the Show Cause Notice. This is in accordance with the clear provisions outlined in Section 75(7) of the CGST Act, 2017. High court ordered, that the adjudication authority must re-hear the case and pass fresh orders that are most appropriate in the present circumstances.
| SW Point of View: The final order (Assessment Order) cannot exceed the scope of the Show Cause Notice unless the taxpayer is given a fair opportunity to address any new matters that were not part of the notice. The court emphasized procedural fairness, ensuring that the taxpayer has the right to contest any allegations or amounts that are brought up in the final order that were not part of the original SCN, however, adjudication authorities must issue a fresh show cause notice even in such circumstances. |
Source: 2024 (11) TMI 824 – TELANGANA HIGH COURT, M/S. DNR CONSTRUCTIONS VERSUS THE STATE OF TELANGANA
Asad Ahmed, Associate
