Sarguru Associates Vs Joint Commissioner (CT) (Madras High Court)
The Madras High Court in Sarguru Associates vs Joint Commissioner (CT) dealt with a case where the petitioner challenged an order dated 29 April 2024, which had been issued without a reply to the earlier show cause notice in GST DRC-01 dated 27 December 2023. The petitioner contended that its auditor had misused authority by generating fake invoices and entries in the GSTR-1 returns for November 2018 and January 2019, falsely showing sales to M/s. Janse Manpower Services, represented by Mr. S. Balraj (the fifth respondent).
According to the petitioner, the auditor colluded with the fifth respondent to help him wrongly avail input tax credit, leading to an undue tax liability on the petitioner under the impugned order. It was further submitted that a police complaint had been filed at Selaiyur Police Station (CSR No. 451 of 2025 dated 25 February 2025), during which the fifth respondent allegedly admitted to the wrongdoing. The petitioner argued that the transactions shown in the GSTR-1 were fictitious and that the issue of whether any actual supply took place could not be determined in the current proceedings.
The Court observed that the petitioner may pursue recovery from the fifth respondent based on his alleged admission before the police. It remitted the case to the second respondent (the adjudicating authority) to pass a fresh order on merits, considering all submissions. The Court also granted liberty to the tax department to initiate appropriate proceedings against the fifth respondent if it was found that no genuine supplies had occurred between November 2018 and January 2019.
