Dinesh Infraprojects Private Limited & anr. Vs State of West Bengal
Date: August 7, 2025
Subject Matter
Revising authority cannot expand the scope of the original SCN u/s 108
Summary
The State filed an application under Section 108 of the WBGST/CGST Act, 2017, to revise an order passed by the appellate authority. The State's contention was that the appellate order was erroneous because it failed to consider the inadmissibility of Input Tax Credit (ITC) under Section 16(4), which would have resulted in a higher tax demand. The State calculated the revised demand to be an aggregate of Rs. 1,11,09,063 across IGST, CGST, and SGST.
However, the court noted a critical fact: the original show cause notice (SCN) issued under Section 73 never included any demand for IGST. Furthermore, the CGST and SGST demands in the original SCN were lower than the amounts now being claimed by the State in its revision application.
The court's analysis focused on the principle that a revising authority cannot expand the scope of the original SCN. It emphasized that the power of revision under Section 108 is limited to correcting a subordinate officer's erroneous order that is prejudicial to the revenue, but it does not allow the State to "improve upon the show cause." The court applied the well-settled legal principle that "what cannot be done directly should not be permitted to be done indirectly."
The court dismissed the State's application for revision. It held that the State cannot, under the guise of its power of revision, introduce new demands (such as IGST) or increase existing ones that were not part of the original SCN. The prayer to revise the appellate order was deemed unjustified, and the application was dismissed.
FULL TEXT OF THE ORDER OF CALCUTTA HIGH COURT
1. The instant application has been filed by the State, inter alia, to revise the order passed by the appellate authority, by invoking the provisions of Section 108 of the WBGST/CGST Act, 2017 (hereinafter referred to as the said Act ).
2. The writ petition has, however, been filed challenging the order passed by appellate authority under Section 107 of the said Act dated 31 st March, 2023. The writ petition has been conditionally admitted by an order dated 12th December, 2023 passed by a Co-ordinate Bench of this Court. The petitioner has complied with the condition and the impugned demand raised by the respondents has since been stayed.
3. Mr. Chakraborty, learned advocate appearing for the State/applicant would contend that the order passed by the appellate authority is erroneous insofar as the same does not take into consideration certain material fact being the inadmissibility of ITC in accordance with Section 16(4) of the said Act which was available at the time of issuance of the order, and if such material fact was considered, the mismatch for 2020-2021 would amount to Rs. 527/-on account of IGST, Rs. 57,37,661/- on account of CGST and Rs. 5,37,087/- on account of SGST, aggregating to Rs. 1,11,09,063/-.
4. Incidentally, on a perusal of the show-cause issued under Section 73 of the said Act, it is noticed that no demand on account of IGST had ever been made. The demand on account of CGST and SGST were also below the figure noted above. Having regard thereto, there was no cause for the proper officer to include any amount of IGST and make a determination as regards the figure of CGST or SGST as noted above or for that matter for the appellate authority to pass any such order.
5. Having regard to the aforesaid and considering the scope of Section 75(7) of the said Act, in my view, the prayer seeking revision of the appellate order cannot be said to be justified.
6. It is well settled that what cannot be done directly should not be permitted to be done indirectly. The power under Section 108, in my view, does not allow the revision authority to improve upon the show-cause. On the guise of exercising a power of revision, the State cannot be permitted to improve upon the show-cause. The power is only limited to correcting an erroneous order passed by any subordinate officer provided the same is prejudicial to the interest of the revenue. On such ground, I am unable to accede to the prayer of the State to allow the revision. Accordingly, the application being CAN 1 of 2025 is dismissed.