K.N.Raj Constructions Vs State Tax Office (Madras High Court)
The writ petitions were heard twice and disposed of by a common order of the Madras High Court. The petitioner challenged assessment orders in Form DRC-07 dated 08.11.2024, as modified on 11.11.2024, passed under Section 74 of the relevant GST enactments for multiple tax periods. This was the second round of litigation. Earlier assessment orders dated 13.09.2023 for reassessment years had been set aside by the Court on 21.08.2024, with directions for remand, fresh consideration, filing of objections, personal hearing, and verification of payments, noting that approximately ₹1.45 crore had already been withdrawn from the petitioner’s bank account.
Pursuant to the remand, fresh DRC-07 orders were issued directing payment of ₹15,23,52,610 along with interest and penalty under Sections 50 and 74 of the TNGST Act, aggregating to ₹55,86,77,302. The dispute centered on a substantial mismatch between turnover reported under GST and turnover declared on the Income Tax portal. While GST records reflected total turnover of ₹26,89,76,834, the Income Tax portal showed ₹1,66,93,09,862 for FY 2016-17 to 2021-22, resulting in a difference of ₹1,40,03,33,028. For certain years, particularly FYs 2018-19 to 2021-22, the variance was significant.
The petitioner contended that the higher figures declared on the Income Tax portal were inflated solely to meet technical qualification criteria in government tenders, and that such declarations could not form the basis for confirming GST demands. It was argued that actual bank receipts during the disputed period totaled only ₹27,89,45,705, which did not correspond with the inflated turnover figures. The petitioner relied on several judicial precedents to submit that turnover declared for tender eligibility could not be used to determine tax liability and that invocation of Section 74 was unjustified.
