Madras HC Sets Aside GST Demand; Orders Rehearing with 50% Tax Pre-Deposit Condition

The present writ petition (W.P. No. 36658 of 2025) has been filed by a company named Tvl. Sri Lakshmi Automobiles (petitioner) in the Madras High Court before Justice C. Saravanan, under Article 226 of the Constitution of India, challenging an order dated December 28, 2023, under Section 73 of the Tamil Nadu Goods and Service Tax Act, 2017 and the Central Goods and Service Tax Act, 2017. The petitioner prayed the court to quash the order. The Deputy State Tax Officer, Padi Assessment Circle, is the respondent in this case.

Background of Case:

On September 15, 2023, Tvl. Sri Lakshmi Automobiles (petitioner) was issued a show cause notice in GST DRC-01. The notice asked the company to appear for a personal hearing and present their side; however, the company did not attend the hearing. Considering this ignorance, the tax officer issued the final order dated December 28, 2023. The time limit for filing an appeal under Section 107 of the GST Act also expired. Therefore, the company filed a writ petition in the Madras High Court directly.

Court’s Observations:

The High Court noted that a similar issue had already been decided in the court earlier, where the court rescued the petitioner by quashing the impugned Order/proceedings on terms subject to the Petitioner depositing 50% of the disputed tax. Considering the same decision, the court quashed the impugned order and remanded the case to the respondent for fresh consideration. Petitioner is being directed to deposit 50% of the disputed tax in cash from the Petitioner’s Electronic Cash Register within a period of thirty (30) days from the date of receipt of a copy of this order.

Additionally, the company is instructed to submit a proper written reply to the earlier Show Cause Notice (SCN) dated September 15, 2023, and attach all supporting documents within 15 days of receiving the order. The judge said that the old order dated 28.12.2023 should be treated as an addendum (additional part) of that show cause notice. Once the company deposits 50% of the tax and files the reply, the tax officer should pass a new order on the case based on the merits and law within 3 months.

If the company fails to follow the aforementioned conditions, the tax officer can go ahead and recover the tax amount as if this writ petition had been dismissed from the beginning. However, before taking any recovery action, the officer must give a proper notice to the company.