MP High Court Imposes ₹2 Lakh Cost On Tobacco Company For Stalling GST Proceedings

The Madhya Pradesh High Court has imposed ₹2 lakh costs on an Indore-based tobacco company for attempting to stall the proceedings initiated against it by the GST authorities.

The company came came under the scanner of the Director General of GST Intelligence back in May 2020, following an investigation into large-scale tax evasion in the pan masala and tobacco industry in Indore.

The probe allegedly uncovered a tax evasion racket exceeding ₹200 crore involving Elora Tobacco Company Limited, the Petitioner here.

The plea sought certified copies of all documents, including, survey register, tobacco stock registers, raw material inward registers, shift-wise production records, machine-wise production records, register containing daily clearance of cigarettes, weekly reports, monthly reports and yearly reports and the statement of 76 officers deposed before the Vigilance Directorate.

The division bench of Justice Vivek Rusia and Justice Binod Kumar Dwivedi however noted that the reliefs sought were identical to those already adjudicated by both the High Court and the Supreme Court. It thus observed,

"we are of the considered opinion that this petition is absolutely misconceived and filed with a malafide intention to install the adjudication of the show cause notice proceedings. That is because of the interim order dated 29.05.2025, no final order could be passed in case of the petitioner alone, whereas in the case of other noticees, a final order has been passed long back. In view of the above, this Writ Petition stands dismissed with a cost of Rs 2,00,000/- (Rupees Two lakhs Only) payable by the petitioner to the respondent in four weeks". 

As per GST authorities, several discrepancies were found at the Petitioner's factory, including suppression of actual quantity of cigarette production. The company was accordingly issued notices alleging evasion of ₹151.64 crore tax and demanding excise duty of ₹76.68 crore.

In 2024, the company approached the High Court seeking release of original documents seized during the investigation that were not relied upon in the show-cause notices. The High Court allowed this request. The Supreme Court also refused to interfere in the matter.

Rejecting the present plea, the High Court noted that the matter has come to an end as the company was supposed to participate in proceedings before the Proper Office of GST. However, the company again approached the Court seeking certified copies of additional records, purportedly to stall the GST proceedings.

"This petition has been filed purposely to stall the adjudication proceedings pending against a number of noticees, including the petitioner. It is important to mention here that except in the case of M/s Elora Tobacco Company Ltd., the proceedings have been completed by passing a final order-in-original", the court added. 

The bench rejected the petitioner's argument that Range Officers are obligated to maintain records. It noted that Section 35 of the GST Act mandates every registered person to keep and maintain at his principal place of business, a true and correct account of production or manufacture of goods, inward and outward supply of goods, stock of goods, input tax credit availed, output tax payable and paid and other particulars, etc.

The court also cited Rule 56 of the CGST Act, 2017, which casts an obligation for the maintenance of accounts by a registered person. 

"Thus, the aforesaid argument of Mr. Malhotra is baseless that all statutory documents were prepared by the Excise Officers and are liable to be handed over/returned to the petitioner by the department", the court added. 

Thus, the case was dismissed. 

Case Title: Elora Tobacco Company v Union of India [WP-14694-2025]

For Petitioner: Advocate Abhinav Malhotra

For Respondent: Advocate Prasanna Prasad

Click here to read/download the order