Madras High Court Clarifies Applicability of Enhanced GST Composition Turnover Limit

The Madras High Court in Tvl. Sahayarani Medicals Vs Assistant Commissioner (ST) examined whether the enhanced turnover cap of ₹1.50 crore for the composition scheme under Section 10 of the CGST Act, 2017 became operational from 01.02.2019 or only from 01.04.2019. The assessee urged that it was eligible to continue under the composition scheme based on Notification No. 02/2019-Central Tax dated 29.01.2019, whereas the State authorities held otherwise and passed an assessment order confirming GST demand, interest and penalty.

The Court rejected the assessee’s interpretation on the effective date of the revised limit, but still allowed a statutory appellate remedy subject to a pre-deposit condition, thereby blending a strict view on law with procedural relief.

Background of the Writ Petition

Origin of the Dispute

  • The assessee, Tvl. Sahayarani Medicals, was subjected to an assessment culminating in:
    • An order in GSTIN 33ABVPL8383P1ZJ/2018-19, and
    • A summary order bearing Reference No. ZD331225442081X dated 30.12.2025.
  • These orders followed a Show Cause Notice in DRC-01 dated 17.06.2025, which specifically called upon the assessee to appear for personal hearing.

The assessee did not avail the opportunity of personal hearing and consequently the adjudicating authority finalized the assessment and confirmed the proposed demand, inclusive of interest and penalty, through the order dated 30.12.2025.

Relief Sought Before the High Court

The assessee filed a writ petition before the Madras High Court challenging the impugned assessment and summary orders. The central plank of its challenge was that it remained within the composition scheme throughout the relevant period and, therefore, was liable to pay tax only at the composition rate, in terms of notifications issued under Section 10 of the respective GST enactments.

The challenge was primarily legal in nature, turning on the correct interpretation of the effective date of the enhanced turnover threshold under the composition scheme.

Assessee’s Argument: Reliance on Notification No. 02/2019-Central Tax

Claim of Eligibility Under Composition Scheme

The assessee maintained that its aggregate turnover exceeded ₹50,00,000 but was below ₹1.50 crore, and that such turnover continued to qualify for composition levy during the disputed period. It relied heavily on Notification No. 02/2019-Central Tax dated 29.01.2019, contending that:

  • This notification brought into effect the relevant amendment to Section 10(1) of the CGST Act, 2017 from 01.02.2019, and
  • As a result, the higher threshold of ₹1.50 crore should be considered operational from 01.02.2019, not from a later date.

Text and Scope of Notification No. 02/2019-Central Tax

The Court reproduced the full text of Notification No. 02/2019-Central Tax, which was issued under sub-section (2) of section 1 of the Central Goods and Services Tax (Amendment) Act, 2018 (31 of 2018).