The Madras High Court overturned an Assistant Commissioner (Sales Tax) demand order of ₹230.55 crore, granting the state-run Indian Railway Finance Corporation Limited (IRFC) temporary relief in its GST dispute. The case is currently remanded for further review.
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This follows the IRFC’s challenge to the initial order, which was issued on December 4, 2024, in a writ petition. After obtaining a copy of the court’s order, the high court ordered the corporation to provide a thorough response along with any necessary supporting documentation within four weeks.
Citing denied input tax credit and obligations under the reverse charge system for the fiscal year 2020–21, the Tamil Nadu tax office issued a demand in December 2024 for ₹209.59 crore in tax and ₹20.96 crore in penalties. The demand was disputed by IRFC, which stated that it could not be upheld and that it intended to file an appeal.
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A 14-day notice period for a personal hearing must be given by the tax authorities once the corporation files its objections. The court added mandated that any such orders must be in compliance with the law and issued only after receiving a thorough hearing from the company.
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Additionally, the High Court ordered the company to provide its response or objection within four (4) weeks of receiving a copy of this ruling and any supporting documentation. IRFC has stated that the GST demand does not materially impact its financials or operations, citing provisions under its leasing arrangements with the Ministry of Railways that allow for tax recoveries and adjustments.
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