Tvl. Ootuvalmadam Pacby 296 vs. The Deputy State Tax Officer - 1

Held

The Court quashed the impugned order dated 31.10.2025. The reasoning was based on the petitioner's submission that the order was cryptic and non-speaking, and the respondent's acceptance of the need for de novo adjudication. The Court directed the respondent to pass a fresh order, subject to the petitioner depositing 10% of the disputed tax (Rs.1,89,568/-) in cash within thirty days. The petitioner was also directed to file a reply to the Show Cause Notice dated 13.09.2023 along with supporting documents. The respondent was instructed to pass a final order on merits within three months of the reply and deposit. The ratio decidendi is that a tax demand order, if found to be non-speaking or passed without proper consideration of the assessee's case, should be set aside and remitted for fresh adjudication, especially when the assessee is willing to pre-deposit a portion of the demand. The Court expressly left undecided the ultimate tax liability of the petitioner on the steel racks.

Facts

The petitioner, Tvl. Ootuvalmadam P.A.C.B.Y. 296, a Primary Agricultural Co-operative Society, filed a writ petition challenging an order dated 31.10.2025 passed by the Deputy State Tax Officer-1, Nagercoil. This order confirmed a demand raised in a Show Cause Notice (DRC-01) dated 13.09.2023 for the assessment year 2022-23, in the absence of a reply from the petitioner. The petitioner, engaged in distributing essential commodities under the Public Distribution System, argued that it had no margin on the supply of steel racks purchased at its cost and therefore was not liable for tax on them. The impugned order noted a declared turnover of Rs.10,53,150/- towards steel racks, with a tax demand of Rs.1,89,568/- (Rs.94,784/- x 2).

Key Issues

1. Whether the impugned order dated 31.10.2025, passed by the respondent under Section 73 of the TNGST Act, 2017, is cryptic, non-speaking, illegal, arbitrary, and without jurisdiction, warranting quashing. The petitioner argued that the order was passed without considering their case and was therefore liable to be quashed. The respondent, through the Government Advocate, did not present a specific argument against the petitioner's claim of the order being non-speaking and illegal, but rather accepted the Court's direction for de novo adjudication. 2. Whether the petitioner is liable to pay GST on the supply of steel racks. The petitioner contended they had no margin on these supplies and thus no tax liability. The respondent's position, as reflected in the impugned order, was that tax was payable on the declared turnover of Rs.10,53,150/-.