Order Date – 03 July 2025

Parties: M/s Pavan Traders Vs State of Uttar Pradesh & Anr.

Facts –

• The Petitioner, M/s Pavan Traders, was served with show cause notice, however they failed to respond to the SCN or appear for the personal hearing fixed on 20 April 2024, despite a reminder sent on 16 April 2024. 
• Consequently, the authority passed a final order raising a total demand which included enhanced tax, interest, and penalty components. 
• The petitioner contended that this final demand exceeded the scope of the SCN, violating Section 75(7) of the Act.

Issue –

• Whether the tax authority could raise a final demand significantly higher than what was proposed in the show-cause notice, without modifying or reissuing the SCN?

Order –

• The Division Bench of Hon’ble High Court noted that Section 75 deals with general provisions relating to determination of tax and sub-section (7) specifically stipulates that the amount of tax, interest and penalty demanded in the order 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. 
• Admittedly, in the present case, the show-cause notice merely indicates the amount of Rs.4,80,527.36 as representing the tax, interest and penalty and the demand qua the three components has been raised at Rs.24,40,363.10, which is ex facie contrary to the provisions of Section 75(7) of the Act.
• In view of the above discussion, on account of violation of provisions of Section 75(7) of the Act, the order impugned cannot be sustained. Consequently, the writ petition is allowed.