[GST / Tax] Show Cause Notice and its Relationship with Final Orders : Legal Parameters Answered

[GST / Tax] Show Cause Notice and its Relationship with Final Orders : Legal Parameters Answered

There are lot of decisions which deal with role of SCN under CGST Act, 2017 and how it affects the final Orders.

In case of National Contracting Company Ltd v. Assistant Commissioner [2024] GCtR 3434 (Madras), it was argued that the impugned order traverses beyond the Show Cause Notice and therefore cannot be sustained in terms of Section 75(7) of the CGST Act, 2017. HC while setting aside the Order held that "more importantly, the impugned order traverses beyond the Show Cause Notice and is thus hit by Section 75(7) of the Act."

It was explained that "it is trite law that when a reply is filed, it is incumbent on the assessing authority to apply its mind to the objections raised and return findings on the issues so raised. Failure to do so, would vitiate the proceedings. That apart, the impugned order is hit by Section 75(7) insofar as it traverses beyond the Show Cause Notice."

S.75 (7) of CGST Act, 2017 uses the words "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."

So, the grounds specified in the notice assume importance in view of S.75 (7).  Section 75 (4) of CGST Act, 2017 provides for opportunity of hearing under certain situations.