The Madras High Court has granted an interim stay on a tax order against an iron and steel trader after finding a prima facie case in its GST return and trading account. The trader argued that the order imposed liability for short payment of tax under the reverse charge mechanism (RCM), although its iron and steel business did not fall within RCM.
The bench of Justice Senthilkumar Ramamoorthy passed the interim order in a petition challenging the State Tax Officer’s order dated July 14, 2026.
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The trader’s principal objection was to the basis of the tax demand. It submitted that liability had been imposed for an alleged short payment under RCM, while the business dealt in iron and steel. The question before the court at this stage was whether the records warranted protection while that challenge was examined.
The court looked at the trader’s GSTR-3B return, particularly the outward taxable supply reported in it, and the sales shown in its trading account. On that material, it found that the trader had made out a prima facie case.
The court accordingly stayed the July 14 order and proceedings pursuant to it until the next hearing date. The Additional Government Pleader (Tax) accepted notice for the State Tax Officer and sought time to obtain instructions. The matter has been listed for October 13, 2026.
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