The Madras High Court recently issued a ruling directing a forensic examination of the records relevant to several writ petitions that contested GST assessment orders. Additionally, the court ordered the applicant to make a pre-deposit of ₹30 lakh, after which the attachment on the applicant’s bank account will be lifted.
The K. N Raj Construction submitted the writ petition against the State tax officer, contesting the assessment order on 8 November 2024, as rectified on 11 November 2024. Order passed under section 74 of the GST legislation for the assessment years 2017-18 to 2021-22.
The applicant, K. N Raj Construction, claimed that the turnover mismatch, which is the inflated turnover, was declared merely to entitle it for the technical evaluation of the government tenders. Rs 26.89 crore reported in GST returns versus Rs 166.93 crore declared in the Income Tax portal was because of the inflated numbers provided exclusively for tender qualification.
The taxpayer stated that the actual bank receipts were just Rs 27.89 crore; hence, no GST obligation can be attached to the inflated figures. On the earlier judicial precedents, assurance was placed where similar allegations had been denied.
According to the respondent, the taxpayer was bound by the turnover declared in the income tax portal, and the assessment orders were detailed and passed post remand. It claimed that the writ petition was delayed, and the taxpayer had another appellate remedy.
The company in September 2023 faced adverse assessment orders, and a sum of Rs ₹1.42 crore was recovered from its bank account. The Court set aside these orders in August 2024, with directions for fresh consideration. As per that, the impugned orders were passed, which directed the current litigation.
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In the high court post-hearing, both sides said that there was a gap between bank receipts and declared turnover, and ruled that the case needed a forensic audit. It asked the GST department’s audit wing to perform an investigation on the records of the applicant, both physical and electronic, within three months. The applicant was asked to cooperate and provide all the related data.
The bench, Justice C.Saravanan, concluded that the matter could not be decided only on the inflated Income Tax numbers. The writ petition was disposed of with a direction for audit and a ₹30 lakh pre-deposit.
As per that, the Madras High Court dismissed the writ petitions with such directions, closing related miscellaneous petitions.
| Case Title | M/s. K.N.Raj Constructions vs. The State Tax Officer |
| Case No. | W.P.No.26637, 26639, 26643, 26651 & 26653 of 2025 |
| For Petitioner | Mr B.Raveendran |
| For Respondent | Mr V. Prashanth Kiran |
| Madras High Court | Read Order |