Facts of the Case

The petitioner, Tvl. Janaki Transport, represented by its partner S. Chidambaram (GSTIN 33AAFFJ8430L1Z8), faced a second, separate demand for the tax period 2021-22, arising from an order dated 19.12.2025 and consequential rectification order dated 09.02.2026 under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017. As in the petitioner's companion matter for an earlier period, the department's inspection found an unreported turnover of Rs.1,81,00,993/- against 'nil' figures declared in GSTR-1 and GSTR-3B, which the petitioner attributed to an inadvertent error in treating reverse-charge supplies as nil turnover rather than to any intention to suppress.

Issues Involved

  1. Whether the nil-turnover declaration on reverse-charge supplies for this separate tax period amounted to wilful suppression justifying Section 74.
  2. Whether the petitioner, having missed the earlier personal hearing, should be granted a further opportunity.

Petitioner's Arguments

  • The petitioner reiterated that the nil entry was an inadvertent error linked to the reverse charge mechanism, that the show cause notice contained no averment of wilful suppression, and that Form GSTR-9 filed even before inspection reflected the transactions as turnover.

Respondent's Arguments

  • The Additional Government Pleader again submitted that reverse-charge turnover must still be reported to prevent revenue loss, that the discrepancy surfaced only upon departmental inspection, and that Section 74 was rightly invoked.

Court Order / Findings

  • Following the same reasoning as in the petitioner's companion matter for the earlier period, the Court found that the transactions ought to have been disclosed as turnover, but that the real question — whether the omission was wilful or a bona fide error — was supported in the petitioner's favour by the pre-inspection GSTR-9 reconciliation.
  • Since the petitioner had not availed the earlier personal hearing, the Court granted one more opportunity of hearing and, being satisfied that no actual tax incidence would arise given the reverse charge position, dispensed with the usual 25% pre-deposit condition.
  • The order dated 19.12.2025 and the rectification order dated 09.02.2026 were quashed and the matter remanded, with the petitioner directed to file an additional reply and avail personal hearing within two weeks and the respondent to decide afresh in accordance with law.

Important Clarification

  • Where a transporter or supplier repeatedly reports reverse-charge supplies as nil turnover across different tax periods, each period's demand is assessed independently on its own facts, but the same bona fide-error defence (supported by a pre-inspection GSTR-9 reconciliation) can succeed across multiple such disputes.
  • Courts may again waive the standard pre-deposit condition for a further hearing where no real tax incidence arises on the disputed turnover.

Sections Involved

  • Section 74, Tamil Nadu Goods and Services Tax Act, 2017 – the provision under which the demand was raised, again turning on the wilful/bona fide distinction.
  • Reverse Charge Mechanism – the recurring point of dispute over how such supplies should be reported.

Decision – In Favour of

The decision is in favour of the Assessee — the demand order was quashed and the matter remanded for a fresh personal hearing without pre-deposit, with the merits left open.

Case Details

Court: Madurai Bench of Madras High Court
Case No.: W.P.(MD) No.11575 of 2026 and W.M.P.(MD)No.8817 of 2026
Coram: Justice D. Bharatha Chakravarthy
Date of Order: 21.04.2026

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