Shree Velu Builders Private Limited Vs State Tax Officer (ST) & Others (Madras High Court)
Summary: The Madras High Court, in Shree Velu Builders Private Limited v. State Tax Officer (ST) & Others, WP No. 38341 of 2026, decided on 5 October 2026, conditionally set aside the assessment order dated 27 March 2026 and remanded the matter for fresh consideration. According to the petitioner’s submissions, the order raised a tax demand of ₹5,50,25,100 based on projected revenue, together with ₹2,40,19,438 towards other liabilities. Its principal grievance concerned taxation of projected revenue for Block Nos. 12 and 13 solely on the basis of planning approval granted by the Member Secretary, Salem Local Planning Authority, although construction had not commenced. The petitioner also contended that the order was passed without a reasonable opportunity to file its reply, while the Revenue maintained that sufficient opportunity had been provided.
The Court found that construction of Block Nos. 12 and 13 had not even commenced and that levying tax on projected revenue merely because their plans had been approved was improper. It also found that the petitioner had not received sufficient opportunity to present its defence, particularly after seeking time to submit a detailed reply. Considering its willingness to deposit ₹50 lakh to demonstrate bona fides, the Court set aside the impugned order subject to payment of that amount within four weeks from receipt of a copy of the order. The setting aside would take effect on the date of payment. The petitioner must submit its reply or objections and supporting documents within four weeks thereafter, following which the authority must decide the matter on merits and in accordance with law after providing a personal hearing. The requirement of a personal hearing in GST adjudication is also discussed in Gabriel India Limited Vs State Tax Officer and Tvl. Signet Industries Limited Vs State Tax Officer.
Upon production of payment proof, the attachments on the bank accounts of the petitioner and its erstwhile director must be lifted within one week, with necessary instructions issued to the banks to de-freeze the accounts. If the authority fails to communicate the lifting of attachment within the stipulated period, the petitioner may directly present proof of deposit and a copy of the order to the banks, which must permit normal operation of both sets of accounts. The writ petition was disposed of without costs. The application seeking dispensation with production of the original impugned order was allowed, and the other connected application was closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The present Writ Petition has been filed challenging the impugned order passed by the 1st respondent dated 27.03.2026.
2. The learned counsel for the petitioner submits that by way of the impugned order, a tax demand was raised for a sum of Rs. 5,50,25,100/- based on the projected revenue of the petitioner, along with a remaining sum of Rs. 2,40,19,438/- towards other liabilities.
3. The learned counsel for the petitioner fairly submits that while the other liabilities are disputed, the primary grievance relates to the levying of tax on the basis of projected revenue for Block Nos. 12 and 13. He submits that this assessment was made solely on the strength of the planning approval granted by the Member Secretary, Salem Local Planning Authority, whereas the construction work is yet to commence. He, therefore, contends that the tax levied on such projected revenue is unsustainable and liable to be set aside. As regards the remaining disputed aspects, the learned counsel submits that the petitioner is ready and willing to deposit a sum of Rs. 50,00,000/-, and prays that subject to the said deposit, the matter may be remanded to the respondent for fresh consideration.
4. It is further contended that although the petitioner participated in the initial proceedings and sought time to file a reply, the impugned order was passed hastily without affording a reasonable opportunity.
5. Conversely, the learned Government Advocate appearing for the respondents submits that sufficient opportunity was granted to the petitioner, but the petitioner failed to utilize the same. Under such circumstances, the respondent was constrained to pass the impugned order.
6. Heard the learned counsel for the petitioner as well as the learned Government Advocate appearing for the respondents and perused the materials placed on record.
7. Upon hearing the parties and perusing the records, this Court finds that as far as Block Nos. 12 and 13 are concerned, construction has not even commenced. Therefore, the question of levying tax on the basis of projected revenue merely because the plan for Block Nos. 12 and 13 was approved by the Member Secretary, Salem Local Planning Authority, is improper.
8. A perusal of the records further indicates that the petitioner was not afforded a sufficient opportunity to put forth their defense, especially when time had been sought to file a detailed reply.
9. Taking into consideration the facts and circumstances of the case, and noting the petitioner’s willingness to deposit a sum of Rs. 50,00,000/- (Rupees Fifty Lakhs Only) to show their bona fides, this Court is inclined to set aside the impugned order on conditions. Accordingly, this Court passes the following order:-
(i) The impugned order dated 27.03.2026 passed by the first respondent is set aside and the matter is remanded to the first respondent for fresh consideration, on the condition that the petitioner deposits a sum of Rs. 50,00,000/- (Rupees Fifty Lakhs Only) with the first respondent within a period of four (4) weeks from the date of receipt of a copy of this order. The setting aside of the impugned order shall take effect upon the date of such payment.
(ii) The petitioner shall file their reply/objections along with supporting documents, if any, within a period of four (4) weeks from the date of the aforementioned payment.
(iii) On receipt of such reply/objections, the respondent shall consider the same and pass appropriate orders on merits and in accordance with law, after affording a personal hearing to the petitioner, as expeditiously as possible.
(iv) Upon production of proof of the said payment, the attachment made on the bank accounts of the petitioner as well as its erstwhile Director shall be lifted within a period of one (1) week from the date of receipt of such proof. Consecutively, the first respondent is directed to issue necessary instructions to the concerned Banks to lift the attachment and de-freeze the bank accounts immediately upon production of proof of the said payment.
(v) In the event that the first respondent fails to communicate the lifting of the attachment within the stipulated time, liberty is granted to the petitioner to produce proof of the deposit of Rs.50,00,000/- along with a copy of this order directly to the concerned Banks. Upon production of the same, the Bank is directed to de-freeze the bank accounts of both the petitioner and its erstwhile Director, and permit them to operate the accounts normally.
10. With the above directions, this Writ Petition is disposed of. No costs. W.M.P.No.43055 of 2026 filed to dispense with the production of the original impugned order dated 27.03.2026 is allowed. Consequently, the connected W.M.P.No.43057 of 2026 is also closed.
