The Madras High Court has stayed a GST show cause notice concerning an alleged excess input tax credit (ITC) claim of ₹56.17 crore after noting that proceedings on the same issue had earlier been dropped and that the identical issue was already pending consideration before the same officer.
The bench of Justice Krishnan Ramasamy, in an interim order observed that the impugned notice prima facie appeared to have been issued with “complete non-application of mind”.
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The Court directed the tax authorities to file a reply. It further ordered that, if a proper explanation or reply was not filed, the officer concerned would have to appear personally before the Court on November 16, 2026.
Popular Mega Motors India Private Limited approached the High Court challenging a show cause notice dated September 28, 2026, issued by the Deputy Commissioner (ST), Central I, Chennai, along with Form GST DRC-01.
The notice related to the tax period from April 2022 to March 2023 and concerned an alleged excess ITC claim of ₹56,17,77,372.
Recording the background, the Court noted that a notice in Form GST DRC-01A had previously been issued on December 27, 2023, followed by a notice in Form GST DRC-01 on February 13, 2024, for the very same issue.
The company submitted its reply, which was accepted by the tax authorities. Consequently, the proceedings were dropped through an order dated August 27, 2024.
Despite the earlier proceedings having been dropped, the authorities subsequently issued notices in Form GST DRC-01 on July 8, 2026, and September 28, 2026.
According to the Court’s order, the notices raised the identical ITC issue along with two other distinct issues. The petitioner had submitted a detailed reply, which was pending adjudication before the authorities.
The Court specifically noted that the officer who issued the present notice and the earlier notice was the same.
It further recorded that the alleged excess ITC claim of ₹56,17,77,372 for April 2022 to March 2023 was already under consideration before that officer, Parthiban Thangavelu. Nevertheless, the impugned notice had been issued for the exact same figure.
The central concern identified by the Court was the repetition of the same ITC issue for the same tax period and amount, despite the earlier dropping of proceedings and the pending consideration of the issue before the same officer.
On these facts, the Court observed, “Therefore, prima facie, it appears that the impugned notice has been issued with a complete non-application of mind.”
The finding is preliminary and forms part of the Court’s consideration of interim relief. The Court has not finally adjudicated the validity of the notice or the company’s entitlement to the disputed ITC.
Granting interim protection, the High Court stayed the operation of the impugned show cause notice dated September 28, 2026.
The relief concerns the operation of that notice. The Court did not finally quash the proceedings or decide the merits of the alleged excess ITC claim.
The respondents were directed to file their reply in the meantime, and the case was listed for November 16, 2026.
The Court also directed that, in the event of the respondents failing to file a proper explanation or reply, Parthiban Thangavelu—the officer who issued the notice—must appear personally at the next hearing.
The personal appearance direction is conditional. It applies if a proper explanation or reply is not submitted by the respondents.
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