Madras High Court Grants Relief in GST Dispute: Fresh Hearing Allowed on 25% Tax Deposit

The present writ petition (No. 36681 of 2025) has been filed by an individual named D. Saravana Kumar (petitioner) in the Madras High Court under Article 226 of the Constitution of India against the State Tax Officer Roving Squad-II, Office of the Joint Commissioner (ST) (Intelligence) (respondent). The bench comprised the Honourable Judge Mr Justice C. Saravanan.

Background of Case:

The issue started when the petitioner was issued a show cause notice (SCN) dated 04.07.2024 (in a format called DRC-01) by the Tax Department, asking him the reason why certain tax amounts should not be imposed. Along with SCN issuance, the department also scheduled a date for a personal hearing to explain his side. However, the petitioner neither responded to the notice nor appeared for a personal hearing.

In conclusion, the Tax Officer passed an order dated 23.09.2024, confirming the tax demand under Section 74 of the GST Act, in a format called DRC-07. The petitioner was not satisfied with the order; however, by the time he decided to challenge it under Section 107 of the GST Act, the statutory deadline had already expired. Therefore, instead of filing an appeal, the petitioner filed a writ petition under Article 226 of the Constitution, praying the court to quash the order dated 23.09.2024, issued by the tax officer and award them a second chance to present their side.

At the time of hearing on 06.10.2025 in the Madras High Court, the judge noted that a case on a similar matter had already been decided earlier, and the court had already helped other taxpayers by cancelling the tax demand orders and also laid down a few conditions. Therefore, the judge decided to follow the same directions.

High Court’s Final Order

The High Court quashed the order dated 23.09.2024 and remanded the case to the Tax Officer to freshly consider the case, additionally laid down certain conditions:

Directed the petitioner to deposit 25% of the disputed tax amount in cash from his Electronic Cash Ledger within 30 days of receiving the court order.

Directed the petitioner to answer the initial show cause notice dated 04.07.2024 and attach all necessary documents to support the case. The petitioner has a time limit of 15 days (from getting the court order) to do so.

The tax officer must then rehear the case and issue a fresh order based on the merits and law, preferably within 3 months after receiving the reply.

If the petitioner fails to follow the aforementioned directions/conditions, then the tax officer is free to continue with recovery proceedings, just like the court had dismissed the case without hearing.

However, the judge also clearly said that before taking any action, the tax officer must give proper notice to the petitioner (Mr Saravana Kumar).

With these directions, the Madras High Court disposed of the writ petition.