Madras High Court Rules GST Demand Exceeding SCN Amount Unsustainable

In a recent judgment, the Madras High Court held that a GST order is unsustainable if the tax demand exceeds the amount specified in the Show Cause Notice (SCN). This ruling came in the case of Nanjappan Senthilkumar v. Deputy Commercial Tax Officer, where the petitioner challenged a tax demand under Section 73 of the CGST Act. The final demand of ₹1,07,410 was far higher than the ₹5,570 mentioned in the SCN, without any valid explanation.

The court cited Section 73(7) of the CGST Act, which prevents tax authorities from issuing demands exceeding the SCN amount. As a result, the demand order was set aside, and new proceedings were allowed, ensuring compliance with the law. This decision aligns with previous cases like Horizon Packs Pvt. Ltd. v. Union of India, reinforcing the need for clear reasoning and adherence to SCN limits in tax adjudications.

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