Turnover Suppression Cannot Be Presumed from Input Mix Ratio Without Evidence | HC

Case Details: Bharath Ready Mix Concrete vs. State Tax Officer State Tax Officer (intelligence) Inspection-1, Cuddalore [2025] 180 taxmann.com 345 (Madras)

Judiciary and Counsel Details

• C. Saravanan, J.
• A.N.R. Jayaprathap for the Petitioner.
• V. Prashanth Kiran, Government Adv. for the Respondent.

Facts of the Case

The petitioner, engaged in the supply of ready-mix concrete, was subjected to tax demands for alleged suppression of turnover for the period April 2020 to May 2024. An inspection was conducted at the petitioner’s premises and records were seized. Subsequently, intimation in DRC-01A and notices in DRC-01 were issued, to which the petitioner filed detailed replies. It was concluded that there was disproportionate inward supply vis-à-vis outward supply and alleged suppression of turnover in GSTR-1, GSTR-3B and GSTR-9C. It was contended that such assumptions were unfounded and that no proof of suppression in the returns or records had been produced. The matter was placed before the High Court.

High Court Held

The High Court held that the tax demand could not be sustained, as the assessment relied solely on an assumed input-mix ratio without any evidence from the returns or records. The Court observed that the impugned orders failed to provide adequate reasoning or substantiation for the allegation of suppression of turnover, and that excess availment of input tax credit was a distinct matter. It was directed that the matter be remitted for a fresh exercise, allowing the petitioner to file replies and submit supporting documents under Section 74 of the CGST Act. The case was thus decided and the matter was remanded for further adjudication.