In a recent decision, the Calcutta High Court addressed a legal dispute involving M/s Vedant Road Carriers Pvt. Ltd. and the Assistant Commissioner of West Bengal State Tax, regarding the confirmation of a tax demand on grounds not originally specified in a show-cause notice. The petitioner, a goods transport agency, was initially issued show-cause notices for allegedly under-declaring outward supply turnover in their GSTR-3B returns. However, during adjudication, the tax authorities revised the basis for the demand without issuing a new notice, treating reverse charge supplies as taxable under forward charge based on a notification.
This adjudication order was challenged, and the appellate authority, despite recognizing the deviation from the original notice, upheld the demand, dismissing the issue as merely technical. Dissatisfied with this outcome, the petitioner sought recourse from the High Court. The central issue was whether confirming a tax demand on new grounds, not mentioned in the initial show-cause notice, violates Section 75(7) of the CGST/WBGST Act and the principles of natural justice.
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The Court concluded that Section 75(7) explicitly forbids confirming a demand on grounds not specified in the show-cause notice. It was deemed a clear statutory violation and a denial of fair opportunity to the taxpayer. The appellate authority's decision to downplay this violation as a technicality was also criticized. Additionally, the Court highlighted that the reliance on undisclosed GST back-office data, without providing it to the assessee, impedes effective representation. Consequently, both the adjudication and appellate orders were annulled, and the case was remanded for fresh adjudication with proper notice and a full hearing opportunity.
Parties: M/s Vedant Road Carriers Pvt. Ltd. & Anr. v. Assistant Commissioner of West Bengal State Tax & Ors.
Order Date: 19 January 2026
Facts –
- The petitioner, a goods transport agency, was issued multiple show-cause notices alleging short declaration of outward supply turnover in GSTR-3B returns for various financial years.
- During adjudication, the Proper Officer passed an order on an entirely different ground by treating reverse charge supplies as taxable under forward charge based on a notification, without issuing a fresh notice.
- The adjudication order was challenged in appeal, where the appellate authority acknowledged deviation from the show-cause notice but still confirmed the demand by terming it a “technical issue.”
- Aggrieved by confirmation of demand beyond the scope of the notice, the petitioner approached the High Court?
Issue –
- Whether an adjudication order confirming tax demand on grounds not stated in the show-cause notice violates Section 75(7) of the CGST/WBGST Act and principles of natural justice.
Order –
- The Court held that Section 75(7) expressly prohibits confirmation of demand on grounds other than those specified in the show-cause notice.
- Passing an adjudication order on a new basis amounts to a clear statutory violation and denial of fair opportunity to the assessee.
- The appellate authority erred in trivialising such violation as a mere technical issue despite acknowledging deviation from the notice.
- The Court further noted that reliance on undisclosed GST back-office portal data, without furnishing it to the assessee, defeats effective representation.
- Both the adjudication order and the appellate order were set aside, and the matter was remanded for fresh adjudication after issuing proper notice and granting full opportunity of hearing.
