Authority: High Court of Meghalaya at Shillong

Order Date: 04.08.2026

Case Overview

  • Parties: Petitioner – M/s City Lights and Equipments, a proprietorship firm represented by Ms. Meghna Marak; Respondents – State of Meghalaya, Commissioner of Taxes, Additional Commissioner of Taxes, and Superintendent of Taxes.
  • Nature of proceedings: Writ petition (WP(C) No. 264 of 2024) challenging a GST demand and associated interest/penalty.
  • Background: During a tax inspection on 03.06.2020, authorities seized rough‑estimate notepads, estimate books, cash memos, and other documents. Show‑cause notices were issued on 18.06.2020 and 29.06.2020 alleging tax evasion.
  • Demand chronology: On 24.08.2020 the Superintendent of Taxes intimated liability of Rs 34,26,901.40 (tax, interest, penalties). A final demand of Rs 59,18,980 was issued on 08.02.2021. An earlier demand of Rs 47,05,688 was also referenced.
  • Petitioner’s objections: Asserted that seized notepads were mere quotations, not sales records; argued that GST should be levied at 5‑12% slab rather than the flat 18% applied; provided bank deposit details for FY 2019‑20; submitted GST returns showing cash and cashless sales accounted for; claimed stock reports showed no deficit; contended that the authorities failed to conduct a proper stock audit and violated Sections 65 & 66 of the Meghalaya GST Act, 2017.
  • Legal arguments: Petitioners relied on Godrej Sara Lee Ltd. vs. Excise and Taxation Officer (2023), CBI vs. V.C. Shukla (1998), and Principal Commissioner Income Tax, Shillong vs. M/s NEEPCO (2024) to argue that entries in loose sheets should not be taxed. They also claimed violation of natural justice because the Additional Commissioner who authorized the inspection later acted as appellate authority.
  • Respondent’s contentions: Stated that an alternative remedy exists under Section 109 of the MGST Act; cited notifications dated 31.07.2024 (constitution of GST Appellate Tribunal – GSTAT) and 17.09.2025 (appeal filing timelines, with 30.06.2026 as final date for orders communicated before 01.04.2026). Argued that the dispute is factual, not a substantial question of law, and cited Bikram Singh vs. Principal Commissioner Income Tax (2023) and Thansingh Nathmal vs. A. Mazid (1964) to support non‑interference.
  • Statutory points raised: Respondents highlighted that under Rule 56(10) of the MGST Act, seized records are presumed to be maintained by the registered person; the petitioner’s failure to produce six‑year books of accounts under Section 36 was noted; alleged non‑compliance with Rule 48 regarding electronic records.
  • Court’s analysis: The Court observed that the MGST/CGST Acts provide a complete appellate machinery (Section 107, then Section 109/117 before GSTAT). It reiterated the principle that where a statutory forum exists, the High Court should not entertain a writ under Article 226 unless a substantial question of law or denial of natural justice is evident. The Court found no breach of natural justice, as the inspection and adjudicatory functions are distinct. The core issue was factual – whether the seized notes represented suppressed sales – which requires detailed evidentiary assessment, not suitable for a writ jurisdiction.

Final Outcome

  • The writ petition is dismissed.
  • The petitioner is directed to pursue the appeal before the GST Appellate Tribunal under Section 109 of the MGST Act.
  • The Court noted that the petition was filed before the GSTAT was constituted; any delay in filing the appeal may be favourably considered by the Tribunal.

Topics: GST Demand, Writ Petition, Tax Litigation