Madras HC Rejects GST Demand on Non-Taxable Receipts, Citing Statutory Remedy

The writ petition has been dismissed by the High Court of Madras, contesting the Goods and Service Tax (GST) demand on non-taxable receipts, mentioning the availability of a statutory remedy.

The applicant/taxpayer, Ragem Motors, contested the assessment order furnished via the respondent for the AY 2017-18 via the same writ petition.

The Court addressed the writ petition for final resolution, with support from both parties. The applicant’s counsel argued that GST had been appropriately paid on the reported income, and the demand related to non-taxable receipts—such as CENVAT credit, income tax refunds, and interest income—was unjustified.

It was further contended that the respondent issued a non-speaking order without verifying the relevant documents or considering the response to the show-cause notice.

The counsel of the respondent mentioned that the applicant had an appeal remedy to the Deputy Commissioner (CT) (GST Appeal), Madurai, but approached the Court instead.

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A single-member bench, led by Justice Vivek Kumar Singh, dismissed the writ petition, stating that the petitioner had the option to appeal to the Deputy Commissioner (CT) (GST Appeal) in Madurai under Section 107 of the GST Act, 2017.

However, the court granted the petitioner the opportunity to submit an appeal within two weeks. Additionally, the appellate authority was instructed to review the appeal without regard to limitations and to make a decision within two months.

Section 107 of the GST Act permits an appeal against an order within 3 months, with a one-month extension if justified. A 10% pre-deposit of the disputed tax is needed.

The department can appeal within 6 months. The Appellate Authority may confirm, modify, or annul the order, and an additional appeal can be made to the GST Tribunal u/s 112 of the Act.