Those Companies, firms and entities who will try to escape tax payments are liable under criminal charges said by Madras High Court

Madras High Court

In this case while analyzing the growing trend of tax evasion, Madras High Court said that any entities who will try to escape the tax payments will be liable under criminal charges. This case was M/s.Tirupur Sree Annapoorna Versus Tamil Nadu Sales Tax Appellate [(Mad) 3 2022]. W.P.Nos.4303 and 4304 of 2008. The case was presided by divison bench of Mr. Justice S. Vaidyanath & Mr. Justice C. Saravanan.

Facts of the case

  • Under Article 226 of the Constitution of the India the petition was filed to issue writ of Certiorari.
  • It was filed by the petitioner that they are into hotel business for several years and for the assessment year 1995-1996, a total taxable sales turnover of Rs.52,39,203/- and Rs.12,064/- by way of returns in Form A1 was shown in respect of Tirupur Sree Annapoorna Hotel and Sree Annapoorna Sweets as per Section 3(1) of the TNGST Act, 1959. However, the 3 rd Respondent had rejected such calculation on the ground that the Registration Certificate, which was applied for Sri Annapoorna Sweets, a sister concern of Tirupur Sree Annapoorna Hotel was not accepted for registration and therefore, the 3 rd Respondent reworked the taxable income and determined as Rs.66,60,363/- and Rs.14,35,123/- respectively towards the turnover for the year.
  • The petitioner challenged the order passed by Tamil Nadu Sales Tax Appellate .
  • They contended that the respondent has lost his sight that there 3 separate accounts book is maintained on the name Sree Annapoorna sweet stalls. Hence the observation made by tribunal that a fictitious firm was created in order to evade taxes are wrong.


The court held that taxes are the main source of income of the government, which are used for the welfare of the people and invest the money in developmental work of the society.

The court said that the firms who pays taxes equally and try to escape from paying the taxes because of them the society faces massive problems. The court said that the petitioner deserves no leniency and the tribunals observation is correct. They further said that those who will try to escape from paying the taxes will be liable under criminal charges.

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