High Court directs investigation of Rs.140 Crore GST Fraud allegation against Coal Company

The Madras High Court has instructed the Tamil Nadu Power Generation Corporation Limited to probe a 140-crore GST fraud claim against a private company that was awarded a three-year coal supply contract with the corporation.

A division bench of Justices S M Subramaniam and K Rajasekar issued an interim order on Thursday, on PT Bara Daya Energi India Private Limited’s petition challenging the tender allotment.

On December 20, 2024, a single judge dismissed a petition filed by PT Bara Daya Energi India Private Limited challenging the rejection of the coal tender bid issued by Tamil Nadu Power Generation Corporation Limited. The solitary court dismissed the writ petition on the sole reason that the petitioner’s holding corporation was barred from participating in the tender.

Senior counsel A L Somayaji, representing the petitioner, argued that the major issue to be decided in the appeal is whether the termination of a contract in favour of the parent business by another state can be used against the subsidiary in Tamil Nadu.

Senior counsel Abdul Saleem, who was also representing the petitioner, claimed that the coal tender was given in an unusual manner for three years without specifying any quantity. Because the coal index is usually volatile, a tender for such a long term and large quantity would result in a loss for the government. He further stated that there were only three bidders, which was rare, and that with the petitioner excluded, only Adani Coal and Smartgen remained in the running.

“The tender was awarded to Smartgen, who suppressed the fact that it was involved in GST fraud to the tune of 140 crore,” said Mr. Singh.

Advocate General P S Raman, representing TNPGCL, stated that the GST fraud allegations have already been investigated and that the contract length has been cut to nine months.

Following the submissions, the court instructed TNPGCL to investigate the matter.