Geena Garments Vs State Tax Officer (Madras High Court)
The petitioner challenged an Assessment Order dated 05.02.2025 issued in Form GST DRC-07 for the tax period 2017–2018 under Section 74 of the GST enactments. The order followed a Show Cause Notice dated 30.08.2024 in Form GST DRC-01, to which the petitioner had responded earlier.
Through the impugned order, the tax demand of ₹2,37,965 each towards SGST and CGST, relating to ineligible Input Tax Credit (ITC), was confirmed. In addition, interest and penalty were imposed. The total liability included interest of ₹4,19,418 and penalty of ₹4,75,930, aggregating to ₹8,95,348 across SGST and CGST components.
The petitioner had accepted the demand proposed in the Show Cause Notice and made payment on 18.10.2024 through Form GST DRC-03 by debiting the Electronic Credit Ledger. However, upon verification, it was found that the Input Tax Credit balance was insufficient during the relevant period. Specifically, the ledger lacked sufficient balance from 03.06.2020 for SGST and from 22.05.2019 for CGST. Based on this deficiency, interest was confirmed in the assessment order.
After hearing both sides and examining the records, the Court held that there was no scope for interference with the impugned order. It observed that the petitioner was liable to pay interest under Section 50(3) and penalty under Section 74 for delayed payment of tax.
