Madras HC Orders Departmental Investigation into Unauthorized Use of Login ID, Enabling GST Evasion

The Madras High Court has instructed the state tax officer to probe the misuse of login IDs linked to potential tax evasion by unidentified individuals.

Justice C. Saravanan’s bench noted the petitioner’s claim of a third party exploiting their login ID to file returns and funnel a substantial input tax credit to this unauthorized entity.

The petitioner, involved in the sale of curtains, mattresses, and pillows for nearly 28 years, raised concerns about a recovery notice amounting to Rs. 11,63,24,233 issued without receiving the assessment order.

The individual, operating as a merchant in the trade of selling curtains, mattresses, and pillows, had been in this line of business for nearly 28 years. Initially, they filed manual returns under the former TNGST Act, 1959, and subsequently switched to electronic filing under the TNVAT Act, 2006, for the assessment year 2009–2010.

Continuing with electronic returns until December 2013, the petitioner encountered an issue from January 2014 onwards. Attempts to log in and file returns were consistently met with a message displaying an ‘invalid login account.’ As a result, manual returns were filed, and the petitioner raised this matter with the respondent on multiple dates: 06.02.2014, 22.12.2014, 09.02.2015, and 02.07.2015.

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The respondent or department argued against the need for intervention regarding the contested recovery notice. They stated that the petitioner had received an assessment order dated November 9, 2021, preceding a notice issued before the order. However, the petitioner did not participate in the assessment proceedings.

The court ruled that the Commercial Tax Department, alongside other respondents, should investigate the petitioner’s complaint within 18 months of receiving the order copy.

During this period, all revenue recovery actions against the petitioner will be suspended. If the petitioner’s complaint is proven false or aimed at enabling fraudulent activity through their login ID, the petitioner’s assets will be subject to sale.