Case Title: M/s. S.P.K. Enterprises v. Deputy State Tax Officer-I, Thiruvottiyur Assessment Circle & Ors.
Court: High Court of Judicature at Madras
Petition No.: W.P. No. 33875 of 2024, decided on 28.11.2024
Relevant Sections: Section 73 and Section 75(7) of the CGST/TNGST Act, 2017
Category: Input Tax Credit – Scope of Show Cause Notice / Natural Justice
Facts (Para 2–3)
The petitioner, M/s S.P.K. Enterprises, a registered works contractor under the GST Act, filed returns for FY 2018–19 and paid taxes accordingly. Upon scrutiny, the department issued a Show Cause Notice (SCN) alleging short payment of tax due to excess Input Tax Credit (ITC) claimed in GSTR-3B compared to GSTR-2A, and discrepancies between GSTR-1 and GSTR-7. The notice proposed recovery of tax, interest, and penalty under Section 73. Despite opportunities for hearing, the petitioner did not respond, leading to the passing of an order on 24.04.2024 confirming the demand. The petitioner contended that the final order relied on grounds not forming part of the original SCN — particularly new discrepancies between GSTR-3B and GSTR-2B — thereby violating Section 75(7) of the CGST Act.
Questions before the Court (Para 3–4)
Whether the impugned assessment order, passed on grounds beyond those stated in the original Show Cause Notice, is sustainable under Section 75(7) of the CGST/TNGST Act, 2017?
Observations (Para 3–6)
The Court observed that the impugned order introduced fresh discrepancies beyond those in the SCN. Under Section 75(7), the tax, interest, and penalty demanded in the final order cannot exceed or differ from the basis of the SCN. The Department admitted this mismatch and suggested that the petitioner may be allowed to treat the impugned order as an SCN and respond accordingly. The Court found this approach reasonable, reiterating that proceedings beyond the scope of the SCN offend natural justice and statutory safeguards.
Judgment (Para 6–7)
The High Court set aside the impugned order dated 24.04.2024 and directed that it be treated as a Show Cause Notice. The petitioner was granted four weeks to file objections with supporting materials, and the Department was directed to pass a fresh order after granting a personal hearing. Further, since recovery proceedings had commenced, bank attachment orders were directed to be lifted forthwith.
Between Fine Lines
This judgment reinforces that any GST assessment order must strictly confine itself to the grounds stated in the Show Cause Notice. Introducing new grounds or demands beyond the SCN violates Section 75(7) and natural justice, rendering such orders unsustainable. For taxpayers, it highlights the importance of verifying that final orders align exactly with the SCN before responding or appealing.
Summary of Cases Referred
| Case | Citation | Verdict / Relevance |
|---|---|---|
| Section 75(7) of CGST Act, 2017 | — | Cited to emphasize that tax, interest, and penalty cannot exceed or differ from the amount and grounds stated in the SCN. No external case law cited. |
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”
 of CGST Act and natural justice principles.){kind=link}