Madras High Court Quashes GST Demand Order U/S 74 for Lack of Independent Reasoning

The Madras High Court has withdrawn a demand order related to the GST Act, 2017. The court discovered that the order just repeated the assessee’s answer without offering its investigation or argument. This lack of separate evaluation was a key basis for the court’s judgment to set aside the order.

Tvl. SKP Readymix has furnished a writ petition contesting the demand order on 13.03.2025, which arose from allegations of (1) excess claim of GST Input Tax Credit (ITC) because of the mismatch between GSTR-2A and GSTR-3B, (2) underreporting of outward supplies, and (3) availment of blocked credit u/s 17(5) of the GST Act.

Towards the third issue, the applicant considered the obligation and has made the partial payments and furnished the documents for the remaining issues.

Justice C. Saravanan, while analysing the impugned order, said that the response of the applicant and the furnished submission in the personal hearing have been extracted in full, on the values of the raised problems, the adjudicating authority does not provide any appropriate discussion or reasoning.

Read Also: GST Section 74A to Address Tax Discrepancies & Incorrect ITC

The order concluded that the applicant did not file the supporting documents and therefore validated the demand without analysing the submitted proof.

Court, if the authority uses its mind, then this application should be shown via a reasoned and speaking order. An order is non-sustainable in law, as the response of the taxpayer is only a reproduction without substantive analysis.

The impugned order has been set aside by the High Court, and the case has been sent back to the respondent authority for fresh adjudication with the particular directives to pass a detailed order with effective discussion on the second and third problems.

A proper hearing should be given and permission to file all the related documents, the court cited. Within 3 months from the receipt of the order of the court, the fresh order is to be passed.