Madras High Court Upholds Disciplinary Action Against Officer For Exceeding GST Rectification Powers

The Madras High Court, on 27 October, refused to interfere with disciplinary proceedings against State Tax officer T. Uma, who allegedly exceeded her statutory powers while passing rectification orders that substantially reduced tax demands against Tvl. Appaswamy Real Estates Limited.

A Bench comprising Justices G. Jayachandran and E. Manoharan held that an officer's exercise of quasi-judicial powers does not shield her from disciplinary action where the charges disclose a prima facie case of misconduct, and dismissed Uma's appeal against the Single Judge's order allowing the enquiry to continue. The judges observed:

“When a prima facie case been made out against the appellant by way of Articles of charges which says, she under the guise of rectification, has reduced the confirmed tax demand aggregating to Rs.266.46 crores out of total demands of Rs.278.50 crores, into Rs.17 crores, this requires scrutiny of facts. For that purpose, the appellant has to necessarily participate in the domestic enquiry justify her decision. She cannot run away from the said process.”

The disciplinary proceedings stemmed from rectification orders that Uma passed while serving as Assistant Commissioner (State Tax). She had passed the orders in the assessments of Tvl. Appaswamy Real Estates Limited for the assessment years 2017-18 to 2021-22 under Section 161 of the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act).

Through a charge memo dated 20 February 2026, the department accused Uma of exceeding the limited scope of rectification under Section 161. It alleged that she undertook fresh factual verification, reconciliation and legal examination of concluded assessments, thereby exercising appellate powers vested in higher statutory authorities.

Further, the department alleged that Uma's rectification orders reduced confirmed tax demands of Rs.278.50 crore to approximately Rs.17 crore, cutting the demand by Rs.266.46 crore and causing substantial prejudice to the State exchequer.

Challenging the disciplinary proceedings, Uma argued that the charge memo did not allege any illegal gratification or extraneous consideration. She maintained that she had passed the orders in good faith while exercising her quasi-judicial powers.

She relied on Section 157 of the TNGST Act, which protects officers against legal proceedings for actions taken in good faith. She also argued that the department had not appealed against her rectification orders and could not, therefore, initiate disciplinary proceedings against her.

The State countered that Uma had converted the limited rectification power under Section 161 into a substantive appellate mechanism by reopening concluded assessments and undertaking a fresh examination of the matters.

The Court examined the Supreme Court's decision in Union of India v. K.K. Dhawan, which recognised that disciplinary proceedings could be initiated against government servants for negligence, recklessness, misconduct, lack of good faith or abuse of quasi-judicial powers.

It clarified that a technically incorrect order, by itself, would not ordinarily justify disciplinary action. However, the department could initiate proceedings where prima facie material indicated misconduct, negligence, recklessness or an attempt to unduly favour a party.

The Bench also examined the Supreme Court's decision in Amresh Shrivastava v. State of Madhya Pradesh, on which Uma relied. It held that the judgment did not impose an absolute bar on disciplinary proceedings concerning the exercise of quasi-judicial powers.

Rejecting Uma's argument that the department's failure to appeal against her rectification orders protected her from disciplinary action, it held that the legality of an order and the conduct of the officer who passed it were separate matters. The department's failure to challenge the orders in appeal could not, by itself, terminate the disciplinary proceedings at the threshold.

Moreover, the judges found that the charge memo raised specific allegations about Uma's exercise of powers under Section 161 and the substantial reduction in tax demands. They held that the departmental enquiry must examine these allegations and that Uma must participate in the proceedings and justify her decisions.

Accordingly, the High Court found no error in the Single Judge's order, dismissed the writ appeal and allowed the disciplinary proceedings to continue.

For the Appellant: Mr. S.R. Rajagopal, Senior Advocate, instructed by Mr. R. Muniyapparaj.

For the State: Mr. S. Illamvaludhi, Special Government Pleader.