GST Demand Challenge Redirected to Appellate Authority as Appeal Period Was Still Open

Tvl. SKS Builders and Promotors Vs Assistant Commissioner (ST) (Madras High Court)

In a case before the Madras High Court, the petitioner challenged an impugned order dated 15.10.2025 confirming the proposal contained in a Show Cause Notice issued in Form DRC-01 dated 23.07.2025. The order was passed after considering the petitioner’s reply submitted in Form DRC-06 dated 25.07.2025.

The Show Cause Notice alleged seven defects. However, the impugned order confirmed the demand only in respect of certain defects. The order noted that the taxpayer had produced GSTR-2A reflecting sales effected by Tvl. Transtroy (India) Ltd and, on that basis, the taxpayer sought eligibility to claim Input Tax Credit (ITC) for the corresponding transaction.

The impugned order quantified the tax demand as follows: under CGST, tax of ₹1,24,650, interest of ₹90,732, and penalty of ₹12,465, totaling ₹2,27,847. A similar amount was determined under SGST. The total demand therefore amounted to ₹4,55,694, comprising tax of ₹2,49,300, interest of ₹1,81,464, and penalty of ₹24,930.

The petitioner contended that ITC had been availed based on invoices issued by M/s. Transcon (India) Private Limited and that payments had been made for the supplies received. The petitioner further submitted that the said company was under the control of a liquidator and had failed to discharge the tax liability.

According to the petitioner, by an order passed in January 2026, the Amaravati Bench of the National Company Law Tribunal approved the liquidation of the company in the relevant proceedings. The petitioner stated that this fact had not been brought to the knowledge of the respondent when the impugned order was passed.

It was also submitted that the petitioner filed a complaint on 09.01.2026 before the appropriate forum against the liquidator appointed by the tribunal under the Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) Regulations, 2017. The complaint was stated to be pending consideration.

The Court noted that the impugned order was dated 16.10.2025 and that the writ petition had been filed on 15.12.2025. This filing was within the limitation period prescribed for filing an appeal before the Appellate Authority against the impugned order.

Considering that the issue was stated to be pending before the concerned forum, the Court disposed of the writ petition by granting liberty to the petitioner to challenge the impugned order before the Appellate Authority.

The Court permitted the petitioner to file an appeal subject to compliance with the statutory requirement of depositing 10% of the disputed tax as a pre-deposit within thirty days from the date of receipt of the order. It further observed that if the petitioner obtained any favourable order from the National Company Law Tribunal, the same should be taken into consideration by the Appellate Authority at the time of final disposal.

The Court also stated that if the petitioner failed to file such an appeal, the respondent would be at liberty to proceed against the petitioner in accordance with law. The writ petition was disposed of with these observations and without costs.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

The petitioner is before this Court challenging the impugned order dated 15.10.2025, whereby the proposal contained in the Show Cause Notice issued in Form DRC – 01 dated 23.07.2025 has been confirmed against the petitioner, after considering the reply submitted by the petitioner in Form DRC – 06 dated 25.07.2025.

2. It is noticed that, out of seven defects alleged in the Show Cause Notice in DRC – 01 dated 23.07.2025, the demand in respect of certain defects alone have been confirmed against the petitioner. Relevant portion of impugned order is extracted hereunder:-

“The tax payer had produced the GSTR-2A which reflects the sale effected by Tvl. Transtroy (India) Ltd and on the said basis the tax payer pray that they are eligible to claim the ITC of the corresponding transaction.”

Operative portion of the impugned order, insofar as computation of demand is concerned reads as under:-

4. The case of the petitioner is that Input Tax Credit had been availed by the petitioner on the strength of invoices issued by M/s. Transcon (India) Private Limited and that payments were also made for the supplies effected to the petitioner.

5. It is submitted by the learned counsel for the petitioner that the said company, which was under the control of a liquidator, failed to discharge the tax liability. According to the petitioner, by an order dated 01.2026, passed by the National Company Law Tribunal, Amaravati Bench, in I.A.No.90 of 2020, I.A.No.129 of 2020, I.A.(IBC).No.70 of 2021 in TCP(IB).No.33/7/AMR/2019, the liquidation was approved. This aspect, according to the petitioner, was not brought to the knowledge of the respondent.

6. It is further submitted by the learned counsel for the petitioner that the petitioner has also filed a complaint on 09.01.2026 before the said forum against the liquidator appointed by the NCLT under sub-regulation (3) of regulation (3) of the Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) Regulations, 2017, which is still pending consideration.

7. The impugned order is dated 16.10.2025 and the present writ petition was filed on 15.12.2025, which is within the period of limitation prescribed for filing an appeal before the Appellate Authority against the impugned order.

8. Since the issue is stated to be pending before the said forum, this Court is inclined to dispose of the writ petition by granting liberty to the petitioner to challenge the impugned order before the Appellate Authority.

9. Accordingly, the petitioner is granted liberty to file an appeal before the Appellate Authority, subject to the condition that the petitioner complies with the statutory requirement of depositing 10% of the disputed tax as pre-deposit within a period of thirty (30) days from the date of receipt of a copy of this order.

10. In case the petitioner secures any favourable order from NCLT, the same shall be taken into consideration by the Appellate Authority at the time of final disposal. In case the petitioner fails to file such an appeal, the respondent shall be at liberty to proceed against the petitioner in the manner known to law.

11. This writ petition is disposed of with the above observations.

No costs. Consequently, connected miscellaneous petition is closed.