The Allahabad High Court addressed a dispute involving M/s Sanjay Construction and the State of Uttar Pradesh regarding a demand for tax, interest, and penalty under the GST Act. The company received an adjudication order under Section 73(9) demanding approximately ₹1.02 crore. However, the company contested this order, arguing that the Show Cause Notice (SCN) did not quantify interest for the period from April 2020 to March 2021, which was later included in the adjudication order.
The GST authorities contended that under Section 75(9), interest is payable even if not specified in the notice. The petitioner challenged this stance, claiming the demand exceeded the notice's scope, and sought relief from the Allahabad High Court.
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The Court ruled that Section 75(7) mandates that the final order's tax, interest, and penalty cannot surpass what is specified in the SCN. It found that the inclusion of interest not quantified in the SCN violated this provision. While Section 75(9) allows for interest to be payable even if not specified in the order, it does not rectify the absence of such specification in the SCN. Consequently, the SCN and adjudication order were quashed, with the Court allowing authorities to issue a fresh notice compliant with the law.
Order Date - 17 February 2026
Parties: M/S Sanjay Construction Thru. Authorized Representative Shivendra Kumar Vs State Of U.P. Thru. Prin. Secy. Finance Deptt. Lko. And Another
Facts -
- M/s Sanjay Construction, through its authorized representative, received an adjudication order under Section 73(9) of the GST Act demanding about ₹1.02 crore towards tax, interest, and penalty.
- The petitioner argued that the Show Cause Notice issued earlier did not quantify any interest for the period April 2020 to March 2021, though the final order imposed such interest.
- The GST authorities defended the demand by relying on Section 75(9), contending that interest is payable even if not specified in the notice.
- Feeling that the demand exceeded the scope of the notice, the petitioner approached the Allahabad High Court (Lucknow Bench) challenging the validity of the order.
Issue -
- Whether interest can be imposed in an adjudication order when it was not quantified in the Show Cause Notice under GST law?
Order -
- The Court held that Section 75(7) clearly states that the tax, interest, and penalty in the final order cannot exceed what is specified in the Show Cause Notice.
- Since the interest for the relevant period was not quantified in the SCN, including it later in the adjudication order violated the statutory provision.
- The Court clarified that Section 75(9) only allows interest to be payable even if not specified in the order, but it does not cure the defect of absence in the SCN.
- Accordingly, the SCN and the adjudication order were quashed, while granting liberty to the authorities to issue a fresh notice in accordance with law.
