GST Demand Cannot Exceed Amount Mentioned In Show Cause Notice: J&K&L High Court

The Jammu & Kashmir and Ladakh High Court has held that a tax demand under GST cannot exceed the amount mentioned in the show cause notice and that doing so violates basic principles of fairness. The Division Bench of Justice Sanjeev Kumar and Justice Sanjay Parihar set aside a GST demand raised against a goods transport agency (GTA), after finding that the final demand was much higher than what was proposed in the original notice. The Goods Transport Agency challenged a show cause notice and a subsequent demand order issued by the GST authorities in the writ petition. The petitioner argued that as a GTA, the liability to pay GST on transportation services falls on the service recipient under the reverse charge mechanism, and not on the transporter itself. The petitioner further pointed out that while the show cause notice had proposed a tax demand of about ₹4.59 crore, the final order confirmed a demand of nearly ₹7.62 crore. According to the petitioner, this was clearly impermissible under the GST law. The Goods and Services Tax Department resisted the argument of the petitioner, and submitted that the assessee had an effective alternative remedy by way of appeal. It was also claimed that the petitioner was involved not only in transport services but also in supply of goods. However, the department could not justify how the final demand exceeded the amount mentioned in the notice. The High Court Bench at Srinagar noted that GST law clearly requires the show cause notice to specify the exact amount of tax, interest and penalty being proposed. This is to ensure that the assessee gets a proper opportunity to respond. The Court remarked that the law expressly bars authorities from confirming a demand higher than what was proposed in the notice. It was noted that, Should the assessing authority desire to pass a final order for an amount exceeding the amount specified in the show cause notice already issued by it, it may issue a fresh notice of show cause with regard to said excess amount provided the issuance of such notice is within limitation. Holding that the demand order violated legal provisions as well as principles of natural justice, the Bench quashed both the show cause notice and the GST demand order. The High Court also directed the assessing authority to reconsider the matter and pass a fresh order in accordance with law. Case Title: M/s Ukas Goods Carrier vs Union Territory of J&K & Ors.Citation: 2025 LiveLaw (JKL) 305 Case No.: WP (C) No. 1961/2021 Date of Order: 02.12.2025 Counsel for Petitioner: Mr. Shariq J. Reyaz, Advocate with Mr. Wahid Lone, Adv. Counsel for Respondents: Mr. Mohsin Qadiri, Sr. AAG with Mr. Mohd Younus Hafiz, ACClick Here To Read/Download Order

GST Demand Cannot Exceed Amount Mentioned In Show Cause Notice: J&K&L High Court

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GST Demand Cannot Exceed Amount Mentioned In Show Cause Notice: J&K&L High Court

Manu Sharma

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