M/S.Sri Vaira Balaji Fireworks vs. The Commissioner Of Commercial Tax

Facts

The petitioner, M/s. Sri Vaira Balaji Fireworks, represented by its partner V. Raja, filed a writ petition challenging an order dated 22.04.2026 passed by the Assistant Commissioner (ST), Sivakasi III Circle (3rd respondent). The impugned order was passed under Section 74A(9) of the GST enactments for the tax period 2022-2023. The revenue's case was that the petitioner diverted receipts to the personal accounts of its partners, thereby suppressing turnover in GSTR-3B returns. The petitioner sought to quash the order and requested a re-consideration of the case, including the clubbing of amounts from individual partner accounts, after affording a personal hearing.

Held

The Court held that the impugned order dated 22.04.2026 passed in Form GST DRC-07 is quashed. The matter is remitted back to the third respondent (Assistant Commissioner (ST)) to pass a fresh order. This is subject to the condition that the petitioner deposits 10% of the disputed tax confirmed by the impugned order, which would otherwise have been required for filing an appeal before the Appellate Authority under Section 107 of the GST enactments. The Court noted that the independent GST registrations obtained by the partners during a subsequent tax period were not relevant to the present case. The petitioner was directed to cooperate with the third respondent and file an additional reply if any. The Court found that the petitioner ought to have submitted a proper reply to the Show Cause Notice and produced relevant documents, and appeared for a personal hearing.

Key Issues

1. Whether the impugned order passed under Section 74A(9) of the GST enactments is liable to be quashed for violation of principles of natural justice and excess of jurisdiction? Petitioner's arguments: The petitioner contended that the impugned order was illegal, unjust, unfair, and passed in excess of jurisdiction, violating principles of natural justice. They sought a direction to re-consider the case by clubbing amounts from individual partner accounts, based on submitted documents and following High Court orders and government instructions, after a personal hearing. Revenue's arguments: The revenue contended that the petitioner diverted receipts to the personal accounts of its partners, thereby suppressing turnover in the monthly returns filed in Form GSTR-3B. The judgment notes that the petitioner ought to have submitted a proper reply to the Show Cause Notice, produced relevant documents, and appeared for a personal hearing.