The Madras High Court has quashed a Rs 5.50 crore GST demand against Shree Velu Builders Private Limited, holding that tax cannot be charged on forecasted revenue from two building blocks only because their plans had been approved. The Court observed that construction had not started in any block.
Justice Krishnan Ramasamy remanded the matter to the State Tax Officer for reconsideration, subject to the company depositing ₹50 lakh within four weeks.
The matter arose from an order passed against M/s Shree Velu Builders Private Limited. It asked for a GST demand of Rs 5,50,25,100 based on predicted revenue as well as Rs 2,40,19438 for other obligations.
The company claimed that the assessment of Block Nos. 12 and 13 was grounded on planning approval granted via the Salem Local Planning Authority, even though construction work had not yet commenced.
The State tax officer upheld that adequate chance had been given. However, the Court discovered that construction had not started in the two blocks and that the company had not been given a chance to defend.
The Court asked the company to submit its objections and related documents within four weeks.
The bench asked the State tax officer to consider the submissions, grant a personal hearing, and pass a fresh order based on merits and in accordance with law.
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The Court also clarified that if the tax officer fails to provide notification regarding the lifting of the attachment within the stipulated time, the company can directly approach the concerned banks with proof of payment and a copy of the order to have its accounts defrozen.
Therefore, the Court quashed the impugned order, on the condition that the company deposit Rs 50 lakh within the said period, and remanded the case for fresh consideration.
| Case Title | M/s.Shree Velu Builders Private Limited vs State Tax Officer |
| Case No. | WP No. 38341 of 2026 |
| For Petitioner | Mr. A.V.Arun |
| For Respondent | Mr. B. Sivaraman |
| Madras High Court | Read Order |
