Allahabad High Court Sets Aside Penalty Order for Exceeding

Allahabad High Court Sets Aside Penalty Order for Exceeding

The Allahabad High Court has delivered a significant judgment in a case where a penalty imposed under the U.P. GST Act was found to be in excess of the amount proposed in the show cause notice. This development highlights the importance of adhering to the mandatory provisions of the Act.

• The show cause notice dated 20.09.2025 proposed a penalty of ₹2,91,620, whereas the adjudication order dated 29.12.2025 imposed a higher penalty of ₹3,24,240.
• The Court found this to be a clear violation of the mandatory provisions of Section 75(7) of the U.P.G.S.T. Act, which restricts authorities from imposing a penalty beyond what is proposed in the notice.
• The Court set aside the impugned order and remitted the matter back to the adjudicating authority for fresh consideration, directing the authority to pass a new order within a period of two months.

This judgment serves as a reminder of the importance of compliance with the provisions of the U.P. GST Act. Businesses and individuals should take note of this development and ensure that they adhere to the mandatory requirements of the Act to avoid any potential penalties or consequences.

The Penalty Imposed Far Exceeds The Penalty Proposed, The Impugned Order Is Without Jurisdiction, To That Extent Violation of The Mandatory Provision of Section 75(7) of The U.P.G.S.T. Act

The Allahabad High Court examined a penalty imposed under the U.P. GST Act where the adjudication order exceeded the amount proposed in the show cause notice. The show cause notice dated 20.09.2025 proposed a penalty of ₹2,91,620, whereas the adjudication order dated 29.12.2025 imposed a higher penalty of ₹3,24,240. The Court found this to be a clear violation of the mandatory provisions of Section 75(7) of the U.P.G.S.T. Act, which restricts authorities from imposing a penalty beyond what is proposed in the notice. It held that, to the extent the imposed penalty exceeded the proposed amount, the order was without jurisdiction. Considering this violation, the Court set aside the impugned order and remitted the matter back to the adjudicating authority for fresh consideration. The authority was directed to pass a new order after granting adequate opportunity of hearing to the petitioner, within a period of two months. The petitioner undertook to cooperate in the proceedings.

FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT

1. Having heard learned counsel for the petitioner and learned counsel for the revenue and having perused the record, it cannot be denied, there exists violation of the mandatory provision of Section 75(7) of the U.P.G.S.T. Act, 2017. Vide show cause notice dated 20.09.2025, penalty Rs. 2,91,620/- was proposed. However, vide adjudication order dated 29.12.2025, penalty Rs. 3,24,240/- had been imposed.

2. To the extent the provisions of Section 75(7) of the said Act is mandatory and further in the present facts, the penalty imposed far exceeds the penalty proposed, the impugned order is without jurisdiction, to that extent.

3. In view of such facts, no useful purpose would be served in keeping the present petition pending or calling for counter affidavit at this stage.

4. In view of the above, the impugned order is set aside. Matter is remitted to the adjudicating authority to pass a fresh order after giving adequate opportunity of hearing to the petitioner. Such proceedings may be concluded with a period of two months from today. Petitioner undertakes to cooperate in the proceedings.

5. Accordingly, the petition stands disposed of.

Readers should treat this as a tax and compliance update, not as personal advice.

This article is for general information based on available source information. It should not be considered legal, tax, investment, or financial advice.