Elgi Sauer Compressors Ltd Vs State Tax Officer (Madras High Court)
The Madras High Court considered a writ petition challenging an order confirming a GST demand for the tax period July 2017 to March 2018. The impugned order dated 05.02.2025 confirmed a demand of ₹1,64,02,442 towards tax, along with interest under Section 50 and penalty under Section 74 of the applicable GST enactments, pursuant to a show cause notice dated 16.08.2024. The proceedings originated from an audit conducted on 28.02.2022, followed by issuance of DRC-01A and DRC-01 notices in March and April 2022, and a subsequent communication in October 2023.
The petitioner challenged the order primarily on legal grounds, contending that the proceedings had attained finality earlier and that invocation of the extended period of limitation under Section 74 was unjustified. It was also argued that the show cause notice was vague and based solely on the audit report. The dispute related to mismatches between GSTR-2A and GSTR-3B, allegedly arising due to technical issues and lack of synchronization between the GST and Icegate portals affecting IGST credit.
The Court noted that, in response to the show cause notice dated 16.08.2024, the petitioner had confined its reply only to legal pleas and had not addressed the allegations on merits. As a result, the authority had no option but to confirm the demand. The Court observed that a challenge to limitation under Section 74 could not be sustained without a substantive reply on merits explaining the factual position.
