The Madras High Court has granted an interim stay in a dispute over a GST demand on the sale of a used car below its purchase price, after the taxpayer argued that the transaction did not generate a positive margin and was covered by Notification No. 8/2018–Central Tax (Rate), dated January 25, 2018.

The bench of Justice Krishnan Ramasamy passed the interim order against the Assistant Commissioner (ST), Sriperumbudur Assessment Circle and found that the company had made out a prima facie case and posted the matter for December 1, 2026.

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According to the submissions recorded in the order, the company had purchased a used car and subsequently sold it for an amount lower than its purchase price.

Appearing for the company, counsel N. Prasad argued that the sale was exempt from GST under Notification No. 8/2018–Central Tax (Rate), as there was no positive margin on the transaction.

The company challenged a demand notice dated December 27, 2025, issued by the tax authority, which had treated the transaction as a taxable supply despite the sale having taken place below the purchase price.

The central issue raised in the petition is whether GST can be demanded on the transaction in light of the notification relied upon by the company and its claim that the sale generated no positive margin.

After considering the taxpayer’s submissions, the Court held that a prima facie case had been established for granting interim relief.

“Considering the submission made by the learned counsel for the petitioner, this Court is of the view that prima facie case has been made out,” the order records. It consequently directed that there would be an interim stay.

Special Government Pleader (Taxes) G. Dhana Madhri accepted the notice on behalf of the tax authority.

The order provides interim protection while the writ petition remains pending. It does not finally decide the applicability of the notification or conclusively hold that the particular transaction is exempt from GST.

The contention that no GST was payable because there was no positive margin is the taxpayer’s argument recorded in the order. The Court’s finding at this stage is confined to the existence of a prima facie case warranting an interim stay.

The brief order does not set out the purchase or sale consideration, the amount demanded, or a detailed examination of the conditions governing the notification’s application. Those questions remain open for consideration in the pending proceedings.

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