Satheesh R vs. The State Tax Officer
Original PDF →Facts
The petitioners, legal representatives of the deceased assessee P. Rajendra Prasath, challenged an order dated 21.01.2026 passed by the State Tax Officer, Madurai Rural. The order confirmed a demand for Seigniorage Fee payable for mining extraction. The deceased assessee passed away on 03.10.2022. Following the death, a reply was filed to a notice dated 11.09.2025 (DRC 01) stating the assessee's demise, but this reply did not address the allegations in the show cause notice. The petitioners sought to quash the impugned order and remit the matter for fresh adjudication.
Held
The Court quashed the impugned order dated 21.01.2026. It remitted the matter back to the respondent for fresh adjudication, subject to the petitioners depositing 10% of the disputed tax in cash within thirty days of receiving the order. The petitioners were also directed to file a reply to the Show Cause Notice dated 11.09.2025, along with supporting documents, treating the impugned order as an addendum. If these conditions were met, the respondent was to pass a final order on merits within three months of the reply and pre-deposit. The Court acknowledged that the issue of taxability of Seigniorage Fee is pending before the Supreme Court and indicated its inclination to follow the consistent view of the High Court in similar circumstances. The Court also noted that Section 93(1)(b) of the GST enactments imposes liability on legal representatives. Failure to comply with the stipulations would allow the respondent to recover the tax as if the writ petition was dismissed.
Key Issues
1. Whether the impugned assessment order dated 21.01.2026, passed by the respondent, is liable to be quashed as illegal, arbitrary, and without jurisdiction, considering the death of the assessee prior to its issuance and the pendency of the issue of taxability of Seigniorage Fee before the Hon'ble Supreme Court? Petitioner's arguments: The petitioners contended that the assessment order was passed without proper jurisdiction, especially after the death of the assessee. They also highlighted that the core issue of whether Seigniorage Fee is taxable under GST is pending before the Supreme Court, implying that the demand might be premature or unsustainable. They offered to pre-deposit 10% of the disputed tax for de novo adjudication. Revenue's arguments: The judgment does not record specific arguments from the revenue. However, it notes that Section 93(1)(b) of the respective GST enactments makes legal representatives liable for tax due if the business of the deceased assessee is discontinued.
Sections Cited
Section 93(1)(b)
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Before: and
M/s.P.Sudarkodi Natchiyar, learned Government Advocate (Tax), takes notice for the respondent.
This Writ Petition is taken up for final hearing at the time of admission with the consent of the learned counsel for the petitioners and the learned Government Advocate (Tax) for the respondent.
In this Writ Petition, the petitioners, who are the legal representatives of the deceased assessee, namely, P.Rajendra Prasath, who died on 03.10.2022, have challenged the impugned Assessment Order in FORM GST DRC-07 dated 21.01.2026 bearing Ref.No.33AFFPR4783M1ZV/2022-23 of the respondent issued against their father. 2/6 https://www.mhc.tn.gov.in/judis
It is noticed that the demand has been confirmed on the Seigniorage Fee payable to the Government for extracting mines. The issue is now pending before the Hon’ble Supreme Court.
It is noticed that after the death of deceased assessee, in response to the notice in DRC 01 dated 11.09.2025, a reply was also filed by stating that the assessee was expired on 03.10.2022. The reply is not meeting the allegations in the Show Cause Notice in DRC 01. 6. It is however noticed that as per Section 93(1)(b) of respective GST enactments, 2017, if the business carried on by the deceased assessee is discontinued, the legal representatives are liable to pay the tax due.
Since the issue is now pending before the Hon’ble Supreme Court as to whether the tax is now payable or not on the Seigniorage Fee payable, I am inclined to follow the consistent view of this Court under the similar circumstances.
At this stage, the learned counsel for the petitioners submits that the 3/6 https://www.mhc.tn.gov.in/judis petitioners are willing to pre-deposit 10% of the disputed tax as a condition for de novo adjudication.
The learned counsel for the petitioners has also made an endorsement to that effect in the Court Bundle, which is extracted hereunder:-
“It is submitted that the petitioner undertakes to deposit 10% of disputed amount.”
In view of the above, the impugned order is quashed and the case is remitted back to the respondent to pass a fresh order subject to the petitioners depositing 10% of the disputed tax in cash as undertaken within a period of thirty (30) days from the date of receipt of a copy of this order.
Within such time, the petitioners shall also file a reply to the Show Cause Notice in DRC 01 dated 11.09.2025 together with requisite documents to substantiate the case by treating the Impugned Order dated 21.01.2026 as an addendum to the Show Cause Notice dated 11.09.2025. 12. In case the petitioners complie with the above stipulations, the 4/6 https://www.mhc.tn.gov.in/judis respondent shall proceed to pass a final order on merits and in accordance with law as expeditiously as possible, preferably, within a period of three (3) months of such reply / pre-deposit.
In case the petitioners fail to comply with any of the stipulations, the respondent is at liberty to proceed against the petitioners to recover the tax in accordance with law as if this Writ Petition was dismissed in limine today.
Needless to state, before passing any such order, the respondent shall give due notice to the petitioners.
This Writ Petition stands disposed of, with the above observations. No costs. W.M.P.(MD) No.16528 of 2026 is allowed. Consequently, connected Writ Miscellaneous Petitions are closed. Index : Yes / No 05.08.2026 Internet : Yes / No apd 5/6 https://www.mhc.tn.gov.in/judis C.SARAVANAN, J.
apd To The State Tax Officer, Madurai Rural (West) Assessment Circle, Commercial Taxes Department, Madurai – 625020. 05.08.2026 6/6 https://www.mhc.tn.gov.in/judis
Reproduced from the public record of the Madras High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.