Quick Summary
Introduction One of the most litigated areas under the Goods and Services Tax (GST) regime is the validity of demand orders passed by adjudicating authorities. Time and again, taxpayers have faced a peculiar situation where the quantum of tax, interest, or penalty demanded in the final order far ex
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FAQ :
No, under Section 75(7) of the CGST Act, the amount of tax, interest, and penalty imposed in a demand order cannot exceed the amount specified in the Show Cause Notice.
The legal basis is Section 75(7) of the CGST Act, which is rooted in the doctrine of audi alteram partem, ensuring taxpayers have the right to be heard on the specific allegations raised in the notice.
Such an order is considered invalid and can be quashed by courts because it violates the taxpayer's right to defend against the proposed demand and exceeds the authority's jurisdiction.
Yes, Indian courts have consistently quashed demand orders that go beyond the scope of the Show Cause Notice, protecting taxpayers even when the excess amount is small.
Taxpayers should carefully scrutinise the SCN and the final order, invoke Section 75(7) of the CGST Act, and consider challenging the order at the appellate stage or in higher courts.
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