Allahabad High Court Sets Aside GST Demand for Multiple Procedural Lapses:Wrong GSTIN, Demand Beyond SCN & Improper Service.

Krishi Rakchha Sewa Kendra & Another
vs.
Union of India & Others
(Allahabad High Court)
Writ Tax No. 5747 of 2025 | Order dated 07-11-2025
Citation: 2025 (11) TAXREPLY 14979

1. Introduction

In a significant ruling reinforcing procedural discipline under GST, the Allahabad High Court set aside a GST adjudication order passed under Section 73 of the UPGST Act, 2017, on account of multiple fundamental lapses, including:

• Issuance of Show Cause Notice (SCN) with an incorrect GSTIN
• Passing of adjudication order against yet another wrong GSTIN
• Creation of demand far exceeding the amount proposed in the SCN
• Alleged non-service of SCN and adjudication order

The judgment is a strong reminder that GST proceedings are quasi-judicial and cannot survive basic jurisdictional and procedural defects, irrespective of the merits of the tax demand.

2. Brief Facts of the Case

• The petitioners were subjected to proceedings under Section 73 of the UPGST Act, 2017.
• A Show Cause Notice dated 22.05.2024 proposed a tax liability of ₹24,10,004.96.
• An Adjudication Order dated 30.08.2024 eventually raised a demand of ₹41,71,718.30.
• More critically:
  • The SCN was issued with reference to GSTIN 09AHZPA5029R1ZC, which did not belong to the petitioners.
  • The adjudication order referred to GSTIN 09ABLFS0522M1ZV, again not belonging to the petitioners.
• The petitioners also contended that neither the SCN nor the adjudication order was properly served.

Aggrieved, the petitioners approached the Allahabad High Court under Article 226 of the Constitution of India.

3. Key Legal Issues Before the Court

The Court examined the following critical issues:

1. Whether GST proceedings can be sustained when SCN and adjudication orders refer to incorrect GSTINs
2. Whether an adjudicating authority can confirm a demand higher than the amount proposed in the SCN
3. Whether non-service of SCN and order vitiates proceedings
4. Whether remand is permissible without allowing limitation defence

4. Relevant Statutory Provisions Explained

4.1 Section 73 - UPGST / CGST Act, 2017

Section 73 deals with determination of tax not paid / short paid without fraud or suppression.

Key requirements:

• Proper issuance of Show Cause Notice
• SCN must clearly specify the amount of tax, interest and penalty
• Adjudication must be confined strictly to the SCN
• Opportunity of personal hearing
• Service of notice as per Section 169

4.2 Section 169 - Service of Notice

Section 169 prescribes valid modes of service:

• GST portal
• Registered email
• Physical delivery
• Affixture / publication (in extreme cases)

Improper or non-service strikes at the root of jurisdiction.

4.3 Article 226 - Constitution of India

Article 226 empowers High Courts to:

• Correct jurisdictional errors
• Set aside orders suffering from patent illegality
• Remit proceedings in exceptional circumstances

5. Findings of the Allahabad High Court

The Court made the following crucial observations:

5.1 Wrong GSTIN = Jurisdictional Defect

• The SCN and adjudication order were issued against two different GSTINs, neither belonging to the petitioner.
• Such a mistake is not clerical but goes to the very root of jurisdiction.
• Proceedings against a wrong GSTIN are void ab initio.

5.2 Demand Beyond SCN Is Illegal

• The SCN proposed a demand of ₹24.10 lakh.
• The adjudication order raised demand of ₹41.71 lakh.
• The Court reiterated the settled principle:

“No adjudication order can travel beyond the show cause notice.”

Any demand exceeding the SCN amount is unsustainable in law.

5.3 Non-Service Became Secondary but Still Relevant

• Although non-service was alleged, the Court held that glaring mistakes of wrong GSTIN and excessive demand alone were sufficient to quash the proceedings.
• Non-service further aggravated the illegality.

5.4 Distinction from Earlier Case (Riya Construction)

The Court distinguished the present case from M/s Riya Construction vs State of U.P., holding that:

• Here, the defect was far more fundamental than procedural irregularities.

6. Final Directions of the Court

The High Court ordered:

1. SCN dated 22.05.2024 and adjudication orders dated 30.08.2024, 11.08.2025 & 31.08.2025 are set aside
2. Liberty granted to issue a fresh SCN under Section 73 within one month
3. Limitation defence shall not arise, as remand is under Article 226 with consent
4. Any provisional attachment orders stand quashed
5. Writ petition disposed of

7. Important Legal Principles Reaffirmed

For Tax Authorities

• GST proceedings must be GSTIN-specific
• Adjudication cannot exceed SCN
• Accuracy in notices is non-negotiable

For Taxpayers

• Wrong GSTIN is a fatal defect
• Excess demand beyond SCN is illegal
• Writ remedy is available even when appellate remedy exists, if jurisdictional error is shown

8. Practical Takeaways for Tax Consultants & Auditors

Checklist While Handling GST SCN / Orders

• Verify GSTIN on SCN and order
• Compare SCN demand vs adjudicated demand
• Check mode and proof of service
• Examine jurisdiction of officer
• Assess limitation independently

When to File Writ Instead of Appeal

• Wrong GSTIN / PAN
• Demand beyond SCN
• Non-service of SCN
• Breach of natural justice
• Patently illegal proceedings

9. Impact of the Judgment

This ruling:

• Strengthens procedural safeguards under GST
• Acts as a warning to mechanical adjudications
• Empowers taxpayers to challenge jurisdictional errors
• Reinforces that GST is law-driven, not revenue-driven

10. Conclusion

The Allahabad High Court has unequivocally held that GST authorities must adhere to statutory discipline. Proceedings marred by wrong GSTIN, inflated demands, and procedural lapses cannot be sustained, regardless of revenue implications.

For taxpayers and professionals, this judgment serves as a powerful tool to defend against arbitrary and careless GST actions.

Author:
Dr. Muhammed Mustafa C T
Senior Tax Consultant, BRQ Associates
???? +91 96331 81898 | ???? brqassociates@gmail.com
???? www.brqassociates.com