Madras High Court Quashes GST Demand Order Subject to 25% Deposit

The Madras High Court has recently ruled in favour of a petitioner by quashing an order, subject to the payment of 25% of the disputed tax. The petitioner, Star Construction, received notice dated 18.07.2024 in ASMT-10 and dated 30.09.2024 in DRC 01 along with three reminders dated 08.11.2024, 22.11.2024 and 02.12.2024. But since the petitioner failed to file a reply to the notices, the GST officer issued a final order dated 10.12.2024, confirming the tax demand.

As per the petitioner, the order was cryptic, barred by limitation, non-speaking, illegal, and arbitrary. Therefore, the petitioner filed a writ petition to request the court to direct the tax officer to pass a fresh order after giving an opportunity for a personal hearing.

The court observed that there have been similar cases previously, where the court had ruled in favour of the petitioner by cancelling the order on certain conditions. Therefore, the court gave another chance to the petitioner and quashed the order on the condition that the petitioner would deposit 25% of the disputed tax in cash from the petitioner’s Electronic Cash Register within thirty days. The petitioner was further directed to submit a reply to the DRC-01 notice by considering the cancelled order as an add-on to that notice. Upon following these directions, the tax officer must pass a fresh order after hearing the petitioner’s side as soon as possible, preferably within three months.

The court clearly mentioned that if the petitioner does not comply with any of these conditions, the tax officer is allowed to proceed against the petitioner.