The Supreme Court has permitted a reduced pre-deposit of Rs. 3.5 crore while staying coercive recovery action in a case involving disputed tax liability of nearly Rs. 159 crore.
The bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan directed the petitioner to deposit a reduced amount of ₹3.5 crore within two weeks. The Court further ordered that upon submission of proof of such deposit, notice would be issued to the respondents.
The matter arose from two show cause notices issued by the tax department, initially raising a combined demand exceeding ₹137 crore, including tax, interest, and penalty. One notice involved a demand of ₹119.98 crore, while the second pertained to a principal tax liability of ₹17.25 crore. According to the petitioner, the effective principal liability was approximately ₹67 crore.
The petitioner contended that he was denied a fair opportunity to respond to the show cause notices. He had sought access to certain documents relied upon by the department; however, although the authorities claimed that the documents were uploaded, they were allegedly made available on a different portal, rendering them inaccessible to the petitioner. As a result, he could not file a proper reply.
Despite this, the department proceeded to pass final assessment orders ex parte, determining the total liability at around ₹159 crore, including interest and penalty.
Challenging these orders, the petitioner approached the Allahabad High Court. However, the High Court declined to entertain the writ petition, citing the availability of an alternative statutory remedy under Section 107 of the U.P. GST Act, which requires a mandatory pre-deposit of 10% of the disputed tax amount.
Subsequently, the petitioner attempted to file an appeal before the Appellate Authority, but the same was rejected due to non-compliance with the pre-deposit requirement, which amounted to approximately ₹6.7 crore.
Before the Supreme Court, senior counsel appearing for the petitioner argued that the assessment orders were passed in violation of principles of natural justice and highlighted the financial hardship in meeting the statutory pre-deposit condition.
The Court granted interim protection by directing that no coercive steps shall be taken against the petitioner pursuant to the impugned assessment orders, subject to compliance with the deposit condition.
The matter is now scheduled for further hearing, with the Court set to examine the legality of the assessment proceedings and the denial of opportunity to the taxpayer.
Case Details
Case Title: M/S Simla Gomti Pan Products Pvt. Ltd. Versus Commissioner Of State Tax U.P. & Ors.
Case No.: Special Leave to Appeal (C) No(s). 5266/2026
Date: 20-03-2026
Counsel For Petitioner: Mukul Rohatgi, Sr. Adv.
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