The Calcutta High Court addressed a case involving Parag Vinimay Pvt. Ltd. concerning the rejection of an appeal by the GST appellate authority. The original issue arose when a show cause notice was issued to the company for excess ITC, based on the fact that its supplier had not filed GSTR-3B returns for specific months. During the adjudication, the supplier filed some returns, providing partial relief, but a demand for one month was confirmed. Before the appeal decision, the supplier filed the remaining GSTR-3B return, addressing the initial issue.
Despite this, the appellate authority rejected the appeal on new grounds, questioning the genuineness of transactions and the receipt of goods, which were not part of the original show cause notice. The central issue was whether the appellate authority could confirm a GST demand based on grounds not included in the initial notice.
Read More: GST - AAAR Odisha: Services provided from the Mumbai HO through field engineers to branch do not create a place of business, fixed establishment - GST registration not required [Order attached]
The Court ruled that GST proceedings must adhere strictly to the scope of the original show cause notice. Introducing new allegations at the appellate stage violates Section 75(4) and Section 107(11) of the GST Act. If new issues are to be considered, the taxpayer must be allowed a chance to respond. Consequently, the appellate order was overturned, and the case was remanded for reconsideration with a proper hearing.
Parties : Parag Vinimay Pvt. Ltd. Vs Assitant Commissioner, State Tax, Bureau of Investigation, South Bengal (Head Quarters) &Ors.
Order Date - 03 February 2026
Facts -
- Parag Vinimay Pvt. Ltd. was issued a show cause notice alleging excess ITC solely because its supplier had not filed GSTR-3B returns for certain months.
- During adjudication, the supplier filed returns for some months, leading to partial relief, while demand for one month was confirmed.
- While the appeal was pending, the supplier also filed the remaining GSTR-3B return, curing the original defect.
- Despite this, the appellate authority rejected the appeal on new grounds questioning the genuineness of transactions and receipt of goods.
Issue -
- Whether an appellate authority can confirm GST demand on grounds not raised in the original show cause notice?
Order -
- The Court held that proceedings under GST must strictly remain within the scope of the show cause notice.
- Raising new allegations at the appellate stage violates Section 75(4) and Section 107(11) of the CGST Act.
- If new grounds are to be relied upon, the taxpayer must be given a fair opportunity to rebut them.
- The appellate order was set aside and the matter remanded for fresh consideration after granting a proper hearing.
