Tamilnadu Road Infrastructure Development Corporation Vs State Tax Officer (Madras High Court)
The Tamilnadu Road Infrastructure Development Corporation (TNRDC) filed a writ petition challenging the GST demand order issued by the State Tax Officer. The dispute arose as TNRDC, a wholly owned government entity, functions solely as an intermediary, receiving grants from the Tamil Nadu government to implement road construction projects and disburse funds to contractors. The corporation, registered under the category of “Tax Deductor,” argued that it should not be subjected to GST on supply transactions. However, a show cause notice was issued on September 28, 2023, followed by a demand order on December 12, 2023. Due to limited technical staff and a lack of awareness of the GST portal, TNRDC failed to respond to the notice in time. The petitioner sought relief, requesting a chance to present its objections and a personal hearing before the final decision.
The Madras High Court ruled in favor of TNRDC, setting aside the demand order. The court acknowledged that the entity’s role as a tax deductor did not make it liable for GST on supply transactions. It also recognized the petitioner’s explanation regarding its failure to respond to the notice. The court directed TNRDC to file its objections within two weeks and instructed the tax authorities to provide a personal hearing before making a final determination. Additionally, the court declined to impose a pre-deposit condition on TNRDC, given its status as a tax deductor. With this ruling, the case was remanded for reconsideration, ensuring that TNRDC is given a fair opportunity to present its case.
