Elora Tobacco Company Limited Vs Union Of India And Others (Madhya Pradesh High Court)
In a recent judgment of the Madhya Pradesh High Court (MP HC), Elora Tobacco Company Limited, a manufacturer of cigarettes, challenged various actions of the revenue authorities under the Central Goods and Services Tax Act, 2017 (CGST Act) and the Central Excise Act, 1944. The petition under Article 226 of the Constitution was filed not against a specific order, but seeking directions for production of documents, cross-examination rights and further time to reply in a show-cause notice (SCN) process.
Factual background
Elora Tobacco, whose manufacturing unit is in Indore, had come under investigation by the Director General of GST Intelligence (DG-GSTI) Bhopal Zone during May/June 2020 upon information of a large racket in the manufacture/supply of pan masala and tobacco products with alleged tax evasion exceeding ₹200 crore. Searches were carried out in June 2020 at the petitioner’s premises and connected entities. Among the findings were large generation of cigarettes (around 12,000 per day) versus much lower recorded production in books, and large clearances without invoices or tax payments. Subsequent to that, the department issued an SCN dated 8 June 2022 (343 pages) demanding GST evasion of ~₹151.64 crore and another SCN dated 3 August 2022 (291 pages) for excise duty of ~₹76.68 crore for the period July 2017–June 2020.
