GST Assessment Challenged on Natural Justice Grounds Tagged to Criminal Writ in Supreme Court

Supreme Court of India on March 12, 2026 directed that a Special Leave Petition challenging a GST assessment order under the Telangana Goods and Services Tax Act, 2017 be heard along with a connected criminal writ petition already pending before the Chief Justice of India. A Bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan passed the tagging order after noting that the two proceedings arise from the same set of facts and involve overlapping allegations of abuse of power by State tax authorities.

Background of the Case

The petitioner, M/S. A.S. Met Corp. Private Limited, challenged an order-in-original of assessment dated July 2, 2025 passed under Section 74 of the TGST Act before the Telangana High Court, alleging serious violation of the principles of natural justice. The petitioner's grievance was that documents seized during an inspection were not supplied to it before the assessment order was passed, leaving it unable to file an effective reply to the show cause notice.

The Telangana High Court rejected the writ petition, finding on facts that the petitioner had been provided 2,434 photocopies of seized documents, scanned soft copies on a pen drive, and RFID tracking data; had been given multiple personal hearing opportunities on scheduled dates; had attended at least one hearing through its advocate; but had persistently failed to file any reply to the revised show cause notice. The High Court found that the petitioner neither specified which documents were missing nor identified which were illegible, and had failed to visit the office on multiple scheduled dates despite reminders. Liberty was granted to the petitioner to approach the statutory appellate authority under Section 107 of the TGST Act with the requisite pre-deposit.

Broader Allegations: GST Used as a Weapon in Insolvency Battle

Before the Supreme Court, Senior Advocate Mr. Prashant Bhushan appearing for the petitioner brought to the Court's attention that an offshoot of the same litigation was pending as Writ Petition (Criminal) No. 19/2026, titled Saurabh Agarwal v. Union of India and Others, which was already being heard by the Chief Justice of India's Court.

The petitioner's case in those criminal writ proceedings contained serious allegations. The petitioner alleged that State Tax Authorities had initiated proceedings against both the petitioner company and its director simultaneously on December 24, 2023, in a manner that was malicious and designed to arm-twist them into foregoing legitimate receivables from M/s. KLSR Infratech Limited, which was under Corporate Insolvency Resolution Process before the NCLT Hyderabad. The petitioner further alleged that the suspended management of KLSR Infratech Limited, described as being close to the then political dispensation in Telangana, had influenced the State Tax Authorities to abuse their powers in support of its cause in the insolvency appeal before the NCLAT Chennai. It was also alleged that a letter from the State Tax department dated August 7, 2023 was unlawfully shared with the Suspended Director of KLSR Infratech Limited in violation of Section 158 of the GST Acts, which mandates confidentiality of information obtained during tax proceedings.

Supreme Court's Order

The Supreme Court, noting the interconnection between the civil tax proceedings and the criminal writ petition, directed that the Special Leave Petition be heard together with Writ Petition (Criminal) No. 19/2026. The Registry was directed to place the order before the Chief Justice of India for appropriate listing.

The Court did not go into the merits of either the natural justice challenge or the broader allegations at this stage, leaving all contentions open.

The order is a procedural one directing consolidation of related proceedings, but its significance lies in the Supreme Court's recognition that the GST assessment challenge and the criminal writ petition raising allegations of political interference and abuse of tax machinery arise from the same substratum of facts. The final adjudication — which will involve both the legality of the assessment order and the wider allegations of misuse of State tax authority in the context of an insolvency proceeding — will now take place before the Chief Justice of India's Court.

Date of Decision: March 12, 2026