Hon’ble Mr. Justice Krishnan Ramasamy In a significant ruling, the Madurai Bench of the Madras High Court has set aside a GST assessment order that had been passed on account of a fundamental misreading of the statutory definition of “turnover” under the GST Act

Madurai Bench of Madras High Court Sets Aside GST Assessment Order; Holds Collected Cannot Be Included in Turnover Under GST Law
Case: Global Poly Bags Industries Pvt Ltd. v. The Assistant Commissioner (St), Virudhunagar II Assessment Circle | W.P.(MD)No.36025 of 2025 | Dated: 23.02.2026 | Coram: Hon’ble Mr. Justice Krishnan Ramasamy
In a significant ruling, the Madurai Bench of the Madras High Court has set aside a GST assessment order that had been passed on account of a fundamental misreading of the statutory definition of “turnover” under the GST Act. Hon’ble Mr. Justice Krishnan Ramasamy has reaffirmed that the word “turnover” as defined under Section 2(112) of the GST Act, 2017, expressly excludes all forms of tax, be it CGST, SGST, IGST, and Cess and that any assessment premised on their inclusion is not merely erroneous, but wholly contrary to the statute.
Background
The Petitioner, M/s. Global Poly Bags Industries Pvt Ltd., Virudhunagar, filed a Writ Petition under Article 226 of the Constitution of India challenging an assessment order dated 24.09.2025, passed by the Assistant Commissioner (St), Virudhunagar II Assessment Circle. The dispute arose on account of a difference of Rs. 25,26,08,367.48 between the turnover declared in Form GSTR-9 and the turnover reflected in the Profit and Loss (P&L) Account of the Petitioner. The Respondent treated this difference as concealment of turnover and proceeded to pass the impugned assessment order.
Question of Law
1. Whether the term ‘turnover’ under section 2 (112) of GST Act, 2017 includes all forms of tax like CGST, SGST, IGST and Cess?
2. Can the difference between the turnover declared in GSTR-9 and that shown in the Profit and Loss Account be treated as concealment of turnover to justify a tax demand against the assessee?
Does not amount to concealment of Turnover
The Court examined Section 2(112) of the CGST Act, 2017, which defines the word “turnover” as,
” Section 2(112): turnover in State/UT means Aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis) and exempt supplies made within a State/UT by a taxable person, exports of goods or services or both and inter-state supplies of goods or services or both made from the State/UT by the said taxable person, but excludes central tax, state tax, union territory tax, integrated tax and cess.”
The Court noted that the statutory definition of “turnover” under Section 2(112) of the GST Act is unambiguous. It explicitly excludes Central Tax, State Tax, Union Territory Tax, Integrated Tax, and Cess. Therefore, wherever the word “turnover” appears in GST returns, it refers only to taxable turnover, excluding all forms of GST. The Court observed that the Respondent’s position that GST collected ought to be included in turnover was fundamentally erroneous and contrary to the basic provisions of GST Law. The Court found that the difference between GSTR-9 turnover and the P&L turnover naturally arises because the P&L Account includes all taxes (GST, SGST, CGST, IGST, etc.), whereas the GSTR-9 turnover excludes them as mandated by law.
Hon’ble Mr. Justice Krishnan Ramasamy observed that the present case is not the first instance, noting that a plethora of cases of a similar nature had been coming before the Court, all traceable to the same fundamental misapprehension of GST Law on the part of Assessing Officers. The Court noted with concern that this reflects a fundamental misunderstanding of basic GST Law on the part of the Assessing Officers. It was observed that if assessment orders were to be passed under such misapprehension, “…will not only waste the precious time of this Court but also the Department and the Assessees”. The Court further directed that the Chief Commissioner of GST take appropriate steps to ensure that Assessing Officers are adequately trained and familiarised with the fundamentals of GST Law, so that multiplicity of unnecessary litigation may be avoided.
Order
While observing that it was a fit case to quash the entire proceedings, the Court chose to remit the matter back to the Respondent for fresh consideration, directing the Respondent to take note of the Court’s observations that any form of tax like CGST, SGST, IGST and Cess shall not be included in the turnover in any of the GST returns.