Allahabad High Court Rules: GST Demand in Adjudication Order Cannot Exceed Amount Specified in Show-Cause Notice – Strikes Down Excessive Demand as Violation of Section 75(7) of CGST Act

 In a key ruling reinforcing procedural safeguards under the GST law, the Allahabad High Court has held that a confirmed GST demand in an adjudication order cannot exceed the amount specified in the show-cause notice (SCN). The decision came in the case of S.R. Construction vs. State of U.P., Writ Tax No. 1407 of 2025.

The petitioner challenged a demand order of ₹59.27 lakh issued under Section 73 of the CGST Act for FY 2018–19, arguing that it far exceeded the ₹28.15 lakh demand mentioned in the original SCN. The order included inflated interest and penalty amounts not proposed earlier.

The Court ruled that the demand violated Section 75(7) of the CGST Act, which explicitly bars tax authorities from confirming any demand higher than that specified in the SCN. The bench, led by Chief Justice Arun Bhansali and Justice Kshitij Shailendra, found the adjudication process unlawful and set aside the impugned order.

This judgment sets a strong precedent by affirming that a fair opportunity of being heard must be provided to the assessee to challenge each component of the demand raised by the department, and that authorities cannot arbitrarily increase the demand during adjudication beyond what was originally specified in the show-cause notice.

Article is written by CA Ankit Karanpuria and CA. Ankush Karanpuria The author can be reached at karanpuriaankit@gmail.com

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