Calcutta High Court Rules GST Demand Cannot Surpass Show Cause Notice Amount; Quashes Assessment Order
The adjudication of tax liabilities under the Goods and Services Tax (GST) framework is strictly governed by statutory boundaries, primarily ensuring that an assessee is not caught off guard by demands exceeding what was initially proposed. In a significant judicial intervention, the Calcutta High Court, in the matter of Raj Kumar Borthakur Vs Joint Commissioner of Revenue, has reinforced the principle that a final tax demand cannot legally exceed the quantum specified in the Show Cause Notice (SCN).
The Court addressed a critical violation of statutory provisions where the adjudicating authority confirmed a financial burden on the assessee that was nearly double the amount proposed in the initial notice.
Factual Matrix of the Dispute
The dispute originated from an assessment carried out under Section 73 of the WBGST / CGST Act, 2017 for the financial period spanning from April 2017 to March 2018.
The sequence of events leading to the litigation is as follows:
- The revenue department issued a show cause cum demand notice to the assessee on 29 September 2023. This notice restricted the proposed tax demand to Rs. 1,13,55,828/-.
- Subsequently, the proper officer passed the final adjudication order on 28 December 2023.
- In a stark departure from the SCN, the final order determined an aggregate liability of Rs. 2,25,47,046/-.