Facts of the Case:

In this case, the petitioner was served with six show cause notices for different financial years ranging from 2017–18 to 2022–23. The allegation in all the notices was uniform, based on “data available in the GST Back Office (B.O.) portal”. The petitioner had allegedly declared a turnover of outward supplies in GSTR-3B which was less than the actual supplies, particularly in relation to transport of goods by road.

Subsequently, on 17 May 2023, the adjudicating authority passed an order under Section 73 of the Act, but on a ground entirely different from that mentioned in the show cause notices. Instead of adjudicating the alleged mismatch in outward supplies, the authority held that since the petitioner had issued a tax invoice under the Forward Charge Mechanism on 10 April 2018, the supplies made thereafter even those under Reverse Charge Mechanism were liable to tax under FCM in terms of Notification No. 20/2017–CT (Rate).

The appellate authority confirmed the adjudication order, despite recording that the adjudicating authority had travelled beyond the show cause notice, terming the lapse as a “technical issue”.

Issue:

Whether an adjudication order can be sustained when the demand is confirmed on grounds entirely different from those stated in the show cause notice, in violation of Section 75(7) of the Act and principles of natural justice.

Held that:

The High Court held that the adjudication order was vitiated as it clearly travelled beyond the confines of the show cause notice. The show cause notices were limited to an alleged understatement of outward supplies in GSTR-3B, whereas the adjudication order fastened liability on a completely different basis, namely recharacterising supplies made under the Reverse Charge Mechanism as taxable under the Forward Charge Mechanism by relying upon a notification.

The Court emphasised that Section 75(7) of the CGST/WBGST Act contains a negative mandate which expressly prohibits confirmation of any demand on grounds other than those specified in the show cause notice. This provision is a statutory embodiment of the well-settled principle that an assessee must know the exact case it has to meet and cannot be taken by surprise at the stage of adjudication. The appellate authority’s approach in acknowledging the violation but brushing it aside as a “technical issue” was found to be wholly unsustainable. The Court observed that the issue went to the very root of jurisdiction and fairness, as it involved a substantive change in the basis of tax liability and not a mere matter of quantification.

The Court further accepted the petitioner’s contention that reliance on undisclosed “GST B.O. portal data”, which was within the exclusive knowledge of the department, without furnishing the same to the petitioner, deprived the petitioner of an effective opportunity to respond, thereby violating principles of natural justice.

Accordingly, both the adjudication order and the appellate order were set aside.

Case name:  M/s. Vedant Road Carriers Pvt. Ltd. & Anr. Versus The Assistant Commissioner of West Bengal State Tax, Jorasanko & Jorabagan Charge & Ors. dated 14.01.2026

To read the complete judgement 2026 Taxo.online 83