No, the Honorable Madras High Court in the case of M/s. Vela Agencies v. Assistant Commissioner, State Tax [2024 TAXONATION 841 (MADRAS)] held that an order should proceed based on the Show Cause Notice issued to the assessee. Further, the demand mentioned in the Show Cause Notice cannot be modified in the order. A fresh Show Cause Notice must be issued to modify the demand. The Honorable Madras High Court observed that the Petitioner was called upon to show cause concerning a sum of INR 8,27,252/-, which was arrived at on an assumption that there was sales suppression. However, the Impugned Order imposed a tax liability of INR 14,97,072/- by comparing the FORM GSTR-3B return and the FORM GSTR-2A and an equal amount of penalty. The Impugned Order did not proceed based on the SCN. It was also noticeable that the Petitioner's electronic credit ledger was debited to the extent of INR 7,52,047/-. In these circumstances, the Impugned Order cannot be sustained. The Honorable Court held that if the Respondent intended to modify the tax proposal in light of the Petitioner's reply, a fresh Show Cause Notice should have been issued. Hence, the Impugned Order was set aside by leaving it open to the Respondent to issue fresh proceedings by issuing a fresh Show Cause Notice to the Petitioner, and the present writ petition was disposed of.
Author's Comments
Section 75(7) of the CGST Act clearly specifies that the "grounds" on which SCN is issued, an Adjudication order has to be passed on the same very "grounds". Where any notice is issued on certain grounds, those grounds are exhaustive terms of the listhat can neither be expanded in case of deficiencies nor cured in case of defects, in adjudication.
This principle has been decided by the Apex Court in case (a) CCE v. Brindavan Beverages (P) Ltd (213)ELT 487(S) and (b) Oryx Fisheries (P) Ltd v. UOT 2011 (266) ELT 422(SC).
The Honorable Supreme Court has ruled in cases like Commissioner of Customs, Mumbai v. Toyo Engineering Ltd., [2006) 7 SCC 592], Commissioner of Central Excise, Bhubaneshwar v. Champdany Industries Ltd.,[(2009) 9 SCC 466], Commissioner of Central Excise, Chandigarh v. Shital International (2011) 1 SCC 109 and Jitendra Kumar v. State of Uttar Pradesh and Anr. wherein it was established that the authorities cannot raise new grounds or arguments that were not part of the SCN.
CA Ritesh Arora
GST Case Law M/s. Vela Agencies v. Assistant Commissioner, State Tax
Citation-2024 TAXONATION 841 (MADRAS)
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