The Calcutta High Court has emphatically reaffirmed that a GST adjudication order cannot travel beyond the allegations contained in the Show Cause Notice (SCN). Any demand confirmed on new, altered, or unrelated grounds is statutorily barred under Section 75(7) of the CGST/WBGST Act, 2017, and is liable to be set aside.
The ruling came in Vedant Road Carriers Pvt. Ltd. & Anr. vs Assistant Commissioner of West Bengal State Tax & Ors. (WPA 12654 of 2025) decided on 14 January 2026, by Justice Om Narayan Rai.
Core Legal Issue
The central question before the Court was:
Can the tax department confirm a GST demand on a completely different legal basis than what was alleged in the SCN, by treating it as a mere procedural or quantification issue?
The Court answered this with a clear and categorical “No.”
Factual Background: How the Demand Shifted Beyond the SCN
The petitioner, M/s Vedant Road Carriers Pvt. Ltd., a Goods Transport Agency (GTA), was issued six SCNs dated 15 March 2023 for multiple financial years.
What the SCN alleged
- The petitioner had under-declared outward supplies in Form GSTR-3B
- The allegation was based on “data available in GST Back Office (B.O.) portal”
- The SCN proceeded on the assumption that tax was payable under forward charge due to understatement of turnover
What the adjudication order held
In the adjudication order dated 17 May 2023, the Proper Officer completely shifted the basis of liability:
- Held that because the petitioner had issued a forward-charge invoice on 10 April 2018
- All subsequent supplies, even those otherwise covered under Reverse Charge Mechanism (RCM),
- Must be treated as forward-charge supplies
- Relied on Notification No. 20/2017-CT (Rate) dated 22 August 2017
- Confirmed tax @ 12% (6% CGST + 6% SGST) on that basis
👉 This ground never appeared in the SCN.
Violation of Section 75(7): Court’s Findings
The High Court held that this approach directly violates Section 75(7), which provides:
“No demand shall be confirmed on grounds other than the grounds specified in the notice.”
Key judicial findings:
1. Change in Basis Is Substantive, Not Technical
The Court rejected the appellate authority’s view that the issue was a “technical” or “quantification” matter. It held that:
- The issue involved whether RCM supplies could legally be recharacterised as forward-charge supplies
- This is a substantive change in the foundation of tax liability
- Such a shift cannot be imposed unilaterally without a fresh SCN
Calling this a “technical issue” was described as trivialising a mandatory statutory violation .
2. Adjudication Cannot Blindside the Taxpayer
The Court reiterated settled law that:
- A taxpayer is entitled to defend only the case set out in the SCN
- An order on a new footing violates principles of natural justice
- Section 75(7) is a statutory codification of this principle
3. Back-Office Portal Data Cannot Be Used Secretly
The SCN relied on GST B.O. portal data, which:
- Was never furnished to the assessee
- Was within the exclusive knowledge of the department
The Court held that:
- Non-disclosure of such material denies a meaningful opportunity of reply
- Proceedings based on undisclosed data are inherently flawed.
4. Appellate Authority Also in Error
The appellate authority:
- Acknowledged that Section 75(7) was violated
- Yet upheld the demand, terming it a procedural lapse
The High Court held that:
- A statutory authority cannot condone a breach of a mandatory provision
- Doing so amounts to jurisdictional error
Relief Granted by the High Court
The Court:
- Set aside:
- The Section 73 adjudication order dated 17 May 2023
- The Section 107 appellate order dated 25 April 2025
- Remanded the matter to the Proper Officer with strict directions:
- Provide the assessee with all back-office data relied upon
- If a new legal basis is proposed, issue a fresh or additional SCN
- Grant full opportunity of hearing
- Clarified that:
- The petitioner may raise limitation objections if otherwise available
- The Proper Officer must decide uninfluenced by earlier orders
Why This Judgment Is Significant
This ruling is a strong reaffirmation of taxpayer protections under GST:
- Reinforces the absolute bar on “travelling beyond the SCN”
- Prevents post-SCN re-engineering of tax demands
- Clarifies that RCM vs FCM classification is a substantive issue
- Curtails misuse of GST back-office analytics without disclosure
- Sends a clear signal that Section 75(7) is not a procedural formality
Practical Takeaways for GST Litigation
- Always compare the SCN and adjudication order line-by-line
- Any new legal theory or reclassification requires a fresh SCN
- Demands based on undisclosed portal data are challengeable
- Appellate authorities cannot cure jurisdictional defects
Source: Calcutta HC Judgement dated 14/01/2026 in Vedant Road Carriers Pvt. Ltd. & Anr. vs Assistant Commissioner of West Bengal State Tax & Ors. (WPA 12654 of 2025)