The Madras High Court has set aside a GST assessment order that quantified tax at ₹7.02 lakh against a combined CGST and SGST demand of ₹2.72 lakh in the show-cause notice, holding that the order travelled beyond the scope of the notice and reflected a patent non-application of mind.
The bench of Justice Krishnan Ramasamy remanded the matter to the tax authority for fresh consideration, directing it to decide the dispute after receiving the taxpayer’s reply and providing a reasonable opportunity of personal hearing.
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The dispute concerned the assessment year 2019–2020, covering April 2019 to March 2020. The business challenged an order dated August 9, 2024, issued by the Assistant Commissioner (ST), Thirumullaivoyal Assessment Circle, Chennai.
Under the challenged order, the authority quantified CGST at ₹3,50,886 and SGST at an identical amount, bringing the combined tax figure to ₹7,01,772.
Counsel for the taxpayer submitted that the show-cause notice had demanded only ₹1,35,790 under CGST and ₹1,35,790 under SGST—a combined amount of ₹2,71,580. The final assessment therefore exceeded the amount specified in the notice by ₹4,30,192.
The taxpayer’s central objection was that the authority had passed the final assessment completely beyond the scope of the show-cause notice. Its counsel also submitted that the business had already deposited ₹4,96,945 towards its tax liabilities.
The Court nevertheless set aside the assessment on the ground that it exceeded the scope of the initial show-cause notice. The order records the Revenue’s limitation objection but does not separately discuss it in detail.
The bench held that the impugned order had been passed beyond the scope of the initial notice.
The Court observed that the assessment consequently reflected a “patent non-application of mind” and was unsustainable in law. It accordingly set aside the order dated August 9, 2024.
The Court did not determine the taxpayer’s final liability on merits, leaving that question to the authority on remand.
The Court directed the taxpayer to submit its reply to the show-cause notice dated May 30, 2024, within four weeks from the date of receipt of a copy of the judgment.
Once the reply is received, the Assistant Commissioner must adjudicate the matter on merits and strictly in accordance with law. The authority must issue due notice and provide a reasonable opportunity of personal hearing so that the taxpayer can defend its case.
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