Disposed¶36

M/S.B.S.Textiles v. The State Tax Officer (Intelligence)

Madras HC24 Jul 2026WP/27186/2026

Case brief

AI extract

What is this about?

GST penalty Section 122(1)(ii) Section 122(1)(vii) Input Tax Credit ITC availment passing on remand set aside certiorari Article 226 place of business ill-health revocation of registration proper officer registered address proprietor not traceable Erode State Tax Officer (Intelligence) M/s B.S. Textiles K. Sivachalapathy fresh order three months Madras High Court 24-07-2026.

What did the court decide?

Impugned penalty orders dated 30.03.2026 set aside and matters remanded for reconsideration, with a fresh order to be issued within three months after providing reasonable opportunity to the petitioner; connected writ miscellaneous petitions closed; no order as to costs. ¶36

M/S.B.S.Textiles Vs The State Tax Officer (Intelligence) — GST and Indirect Tax | Madras HC (2026)

What the court decided

AI extract

Outcome

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Issue for consideration

Whether the penalty orders dated 30.03.2026 imposing penalty under Section 122 of the applicable GST enactments for availment of ITC and for enabling the availment of ITC should be quashed. +1 more

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Ratio / Principle

The impugned orders do not indicate any basis for arriving at the conclusions that business was not carried on during the relevant periods and that ITC was utilized or passed on; hence, re-consideration is warranted.

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Key takeaways

The impugned orders are set aside and the matters are remanded for reconsideration; after providing a reasonable opportunity to the petitioner, a fresh order shall be issued within three months from the date of receipt of a copy of this order.ratio¶35

Detailed headnote1 paragraphs

Madras High Court (Senthilkumar Ramamoorthy J.), by common order dated 24-07-2026, disposed of six writ petitions filed by M/s B.S. Textiles under Article 226 of the Constitution of India challenging penalty orders dated 30.03.2026 passed by the State Tax Officer (Intelligence), Erode, under Section 122(1)(ii) and Section 122(1)(vii) of the applicable GST enactments for availing of and utilizing Input Tax Credit and for passing on ITC to recipients across the periods 2020-21 to 2025-26. The Court held that the impugned orders did not indicate any basis for the conclusions that business was not carried on during the relevant periods and that ITC was utilized or passed on, and therefore set aside the orders and remanded the matters for reconsideration, directing issuance of a fresh order within three months after providing reasonable opportunity to the petitioner. Connected writ miscellaneous petitions were closed; no order as to costs.

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 24-07-2026

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CORAM

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THE HON'BLE MR JUSTICE SENTHILKUMAR RAMAMOORTHY

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WP Nos. 27167, 27182, 27179, 27184, 27186 & 27171 of 2026 and WMP Nos. 29732, 29745, 29751, 29754, 29758& 29735 of 2026

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M/S.B.S.Textiles Represented by its Proprietor K. Sivachalapathy, No. 221 Krishnammal Building, Easwaran Koil Street, Erode - 638001.

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..Petitioner(s)

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The State Tax Officer (Intelligence) Inspection Group-V, Office of the Joint Commissioner (ST) (Intelligence), Erode Division, Erode - Erode - 638002.

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..Respondent(s)

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PRAYER in W.P.No.27167 of 2026 : Writ Petition filed under Article 226 of

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The Constitution of India praying for the issuance of a Writ of Certiorari, calling for the records of the respondent in his proceedings in GSTIN 33AQSPS1778B1ZK/2020-21, quash the order dated 30.03.2026 passed therein.

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PRAYER in W.P.No.27182 of 2026 : Writ Petition filed under Article 226 of The Constitution of India praying for the issuance of a Writ of Certiorari, calling for the records of the respondent in his proceedings in GSTIN 33AQSPS1778B1ZK/2022-23, quash the order dated 30.03.2026 passed

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therein.

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Page1 of 5

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https://www.mhc.tn.gov.in/judis

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PRAYER in W.P.No.27179 of 2026 : Writ Petition filed under Article 226 of

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The Constitution of India praying for the issuance of a Writ of Certiorari, calling for the records of the respondent in his proceedings in GSTIN 33AQSPS177SB1ZK/2021-22, quash the order dated 30.03.2026 passed therein.

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PRAYER in W.P.No.27184 of 2026 : Writ Petition filed under Article 226 of The Constitution of India praying for the issuance of a Writ of Certiorari, calling for the records of the respondent in his proceedings in GSTIN 33AQSPS1778B1ZK /2023-24, quash the order dated 30.03.2026 passed therein.

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PRAYER in W.P.No.27186 of 2026 : Writ Petition filed under Article 226 of The Constitution of India praying for the issuance of a Writ of Certiorari, calling for the records of the respondent in his proceedings in GSTIN 33AQSPS1778B1ZK/ 2024-25, quash the order dated 30.03.2026 passed therein.

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PRAYER in W.P.No.27171 of 2026 : Writ Petition filed under Article 226 of The Constitution of India praying for the issuance of a Writ of Certiorari, calling for the records of the respondent in his proceedings in GSTIN 33AQSPS1778B1ZK/2025-26, quash the order dated 30.03.2026 passed therein.

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For Petitioner(s): in all WP’s

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Mr.P.V.Sudakar

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Page2 of 5

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https://www.mhc.tn.gov.in/judis

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For Respondent(s): Ms.Amirta Poonkodi Dinakaran, in all WP’s Government Counsel (Tax)

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COMMON ORDER

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Orders imposing penalty under Section 122 of applicable GST enactments for availment of Input Tax Credit (ITC) and for enabling the availment of ITC are challenged in these writ petitions.

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Learned counsel for the petitioner submits that the petitioner had shifted his place of business on account of ill-health to a place owned by him. On account of not carrying on business at the registered place of business on the date of inspection, he submits that penalty was imposed on the assumption that the petitioner did not carry on business during the entire period running from 2020-2021 to 2025-2026. He adds that the registration was restored pursuant to a revocation application filed by the petitioner.

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Ms.Amirta Poonkodi Dinakaran, learned Government Counsel (Tax),

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accepts notice for the respondent. She points out that the proper officer found that no business was being carried on at the registered address and that the Proprietor was not traceable.

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__________ Page3 of 5

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https://www.mhc.tn.gov.in/judis

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On perusal of the impugned orders, it is evident that penalty was imposed under Section 122(1)(ii) and Section 122(1)(vii) for availing of and utilizing ITC and passing on ITC to the recipient, respectively. Penalty is imposable on these grounds if the proper officer were to conclude that business was not carried on during the relevant periods and ITC was utilized or passed on as the case may be. The impugned orders do not indicate any basis for arriving at such conclusions. Hence, re-consideration is warranted. Towards that end, the impugned orders are set aside and these matters are remanded for reconsideration. After providing a reasonable opportunity to the petitioner, a fresh order shall be issued within three months from the date of receipt of a copy of this order.

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These writ petitions are disposed of on the above terms. Consequently,

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connected writ miscellaneous petitions are closed. There shall be no order as to costs.

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24-07-2026

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Index: Yes/No Speaking/Non-speaking order Neutral Citation: Yes/No RNA

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The State Tax Officer (Intelligence) Inspection Group-V, Office of the Joint Commissioner (ST) (Intelligence), Erode Division, Erode - Erode - 638002.

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__________ Page4 of 5

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https://www.mhc.tn.gov.in/judis

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SENTHILKUMAR RAMAMOORTHY J.

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RNA

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WP Nos. 27167, 27182, 27179, 27184, 27186 & 27171 of 2026 and WMP Nos. 29732, 29745, 29751, 29754, 29758& 29735 of 2026

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24-07-2026