HC Directs Assessee to Appellate Remedy in Section 74 GST Dispute

Case Details: Tvl.Dr. M.Sundaram Hospital (P.) Ltd. vs. State Tax Officer-II (RS) - [2026] 185 taxmann.com 845 (Madras)

Judiciary and Counsel Details

N. Sathish Kumar & M. Jothiraman, JJ.
Raja Karthikeyan for the Appellant.
R. Suresh Kumar, Additional Government Pleader for the Respondent.

Facts of the Case

The petitioner, a private hospital providing healthcare services and operating a retail medical shop within the hospital premises, challenged assessment orders passed under section 74 of the CGST/TNGST Acts for the assessment year 2020-21. The petitioner contended that there was neither misstatement nor fraudulent intention to evade tax and, therefore, proceedings could only have been initiated under section 73 and not section 74. It was further argued that the State authorities lacked jurisdiction as the petitioner was under the administrative control of Central GST authorities. The writ petitions challenging the assessment orders were dismissed with liberty to avail appellate remedy under section 107. Aggrieved thereby, the petitioner preferred writ appeals before the High Court.

High Court Held

The High Court held that the dispute regarding invocation of section 74 involved examination of factual findings relating to suppression and intention to evade tax, which could appropriately be adjudicated only by the Appellate Authority. The Court observed that the authorities had already arrived at a finding of suppression and, if such conclusion was erroneous, the proper remedy available to the petitioner was to file an appeal under section 107 of the CGST Act. The High Court further relied upon the decision of the Supreme Court in Armour Security (India) Ltd. v. Commissioner, CGST and held that intelligence-based enforcement action could be initiated either by Central or State tax authorities irrespective of administrative assignment. It was held that the Writ Court had rightly relegated the petitioner to the appellate remedy while permitting all jurisdictional and legal grounds to be raised before the Appellate Authority. Accordingly, the writ appeals were dismissed.