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Adjudication Beyond Show Cause Notice: Violation of Section 75(7) of the CGST Act, 2017
Introduction: Statutory restriction on adjudication
Section 75(7) of the Central Goods and Services Tax Act, 2017 statutorily restricts the adjudicating authority from confirming any demand beyond the scope and quantum proposed in the show cause notice. The provision expressly mandates that the amount of tax, interest, or penalty confirmed in the adjudication order shall not exceed the amount specified in the notice and that no demand shall be confirmed on grounds other than those set out therein. This provision is mandatory in nature and goes to the root of the jurisdiction of the adjudicating authority.
The legislative intent behind Section 75(7) is to ensure fairness, certainty, and adherence to the principles of natural justice in tax adjudication. The show cause notice constitutes the very foundation of jurisdiction, defining both the scope and quantum of adjudication. Once a notice is issued, the authority is strictly bound by its contents and cannot enlarge, modify, or improve upon the allegations or the proposed demand at the stage of passing the final order.
Statutory Provision
Section 75(7) of the CGST Act, 2017 reads as under:
(7) 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.
The use of the expression “shall” renders the provision mandatory in nature, leaving no discretion with the adjudicating authority. Any adjudication order that exceeds the quantum proposed in the show cause notice or confirms demand on grounds not mentioned therein suffers from lack of jurisdiction and is void ab initio. Such a defect is substantive and not merely procedural, and therefore cannot be cured by subsequent reasoning or remand.
Judicial pronouncements under the GST regime have consistently affirmed that Section 75(7) operates as an absolute bar against enhancement of demand or change of grounds at the adjudication stage. Orders passed in violation of this provision have been held to be ultra vires the CGST Act, 2017, violative of natural justice, and liable to be quashed.
Judicial Interpretation under the GST Regime
Under the GST regime, High Courts have consistently held that an adjudication order cannot travel beyond the show cause notice. It is settled law that the grounds and substance of the alleged offences must be clearly, explicitly, and adequately set out in the show cause notice itself, so as to afford the noticee a fair and meaningful opportunity to respond. This requirement is fundamental to ensuring principles of natural justice in administrative proceedings.
The Hon’ble Supreme Court, in CCE v. Champdany Industries Ltd. [2009 (241) E.L.T. 481 (SC)], held that unless the very foundation of the case is laid in the show cause notice, the revenue cannot sustain or argue a case beyond what is contained therein. A similar view was reiterated by the Court in CCE v. Ballarpur Industries Ltd. [2007 (215) E.L.T. 489 (SC)].
The Hon’ble Allahabad High Court in the case of M/s Vrinda Automation Versus State of Uttar Pradesh and another – [2025 (5) TMI 1435 – Allahabad High Court] held that a demand order exceeding the amount specified in a show-cause notice violates the mandatory bar in Section 75(7) of the CGST Act, 2017 and must be set aside.
A similar view has been consistently adopted by the Allahabad High Court in a series of decisions, including:
> M/s S.S. Enterprises Lko. Thru. Its Partner Vimal Kumar Shukla Versus State Of U.P. Thru. Addl. Chief Secy. Tax And Registration U.P. Lko. And 3 Others. 2025 (12) TMI 936-Allahabad High Court
> M/s Kisan Brick Field, Para Saray Itiyathok Gonda Thru. Proprietor Shaban Mohammad Versus State Of U.P. Thru. Prin. Secy. Tax And Registration Lko. And 3 Others 2025 (11) TMI 837-Allahabad High Court.
> M/s Sun Roadways Versus State of Uttar Pradesh and another 2025(4) TMI 1378-Allahabad High Court
> M/s Vibhuti Tyres Versus State of U.P. and Another 2025 (5) TMI 767- Allahabad High Court
Further, the Hon’ble Karnataka High Court in the case of M/s Prestige Nottinghill Investments v. Union of India & Ors. [2025 (11) TMI 1915 – Karnataka High Court] echoed the same principle, holding that confirmation of demand beyond the show cause notice is impermissible and vitiates the entire adjudication.
Settled legal position
The consistent judicial view under GST is that the show cause notice defines the boundaries of adjudication, and the authority cannot transgress those boundaries either by enhancing the demand or by changing the basis of liability. Any such exercise amounts to a jurisdictional error and renders the adjudication order unenforceable in law.
Conclusion
In view of the clear statutory mandate under Section 75(7) of the CGST Act and the authoritative pronouncements of various High Courts, it is evident that a demand order exceeding the scope or quantum of the show cause notice is jurisdictionally invalid. Such an order violates the principles of natural justice, is contrary to the CGST Act, and is liable to be quashed.
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