High Court Strikes Down GST Order for Non-Quantification of Interest in GST-SCN
High Court Strikes Down GST Order for Non-Quantification of Interest in GST-SCN
The petitioner, M/S Mahesh Chandra Trading Company, challenged an order dated 20.08.2024 under Section 73(9) of the GST Act, 2017.
The order imposed a liability of Rs. 270,899.55. The petitioner argued that the show cause notice (SCN) issued on 17.05.2024 did not quantify any interest for the period 2019–20, though the final order imposed it.
The Reliance was placed on Section 75(7), which requires that the tax, interest, and penalty demanded in the order must not exceed what is specified in the SCN.
Petitioners also mentioned the precedent M/s Vrinda Automation v. State of U.P. (2025), where it was held that penalty/interest beyond the SCN is contrary to Section 75(7).
The GST authorities argued that under Section 75(9), interest is payable whether or not specified in the order.
Denial of Fair Hearing under UPGST Act: High Court Sets Aside Order Due to Insufficient Notice
Issue of the case
Whether the authorities impose interest liability in the final order when it was not quantified in the show cause notice?
Decision of the Court
The Court held that failure to quantify interest in the SCN is a violation of Section 75(7). Section 75(9) applies only when interest is not specified in the order, not when it is missing from the SCN.
Consequently, the impugned order and SCN were quashed. Also, The Authorities were given liberty to issue a fresh SCN in accordance with the law.