Tvl. Chellam Agency vs. The State Tax Officer
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The petitioner, Tvl. Chellam Agency, filed a writ petition challenging an assessment order dated 31.08.2024, issued by the State Tax Officer, Madurai Rural (West) Assessment Circle. This order confirmed a proposal in a Show Cause Notice dated 27.05.2024 for the tax period 2019-20, passed due to the petitioner's failure to respond. Subsequently, the petitioner's application for waiver of interest or penalty under Section 128A was rejected on 14.03.2026. The petitioner noted that the limitation period for filing an appeal under Section 107 had expired. The petitioner stated that the entire disputed tax was recovered on 20.01.2025 and expressed willingness to pre-deposit 50% of the disputed tax for de novo adjudication, subject to verification of the recovery.
Held
The Court quashed the impugned assessment order dated 31.08.2024 and the consequential rejection order dated 14.03.2026. The case was remitted back to the respondent for a fresh adjudication. This decision was based on the petitioner's willingness to deposit 50% of the disputed tax in cash from their Electronic Cash Register, after deducting the amount already recovered. This deposit was to be made within thirty days of receiving the order, subject to the respondent's verification of the recovery. The petitioner was also directed to file a reply to the Show Cause Notice dated 27.05.2024, along with supporting documents, within the same period. The impugned order was to be treated as an addendum to the show cause notice. The respondent was to pass a final order on merits within three months of the reply and pre-deposit, after providing due notice to the petitioner. Failure to comply with these stipulations would allow the respondent to recover the tax as if the writ petition was dismissed. No issue was expressly left undecided.
Key Issues
1. Whether the impugned assessment order and consequential rejection order are liable to be quashed on grounds of illegality, lack of jurisdiction, and violation of principles of natural justice, particularly in light of the petitioner's failure to respond to the show cause notice and the subsequent recovery of the entire disputed tax? (Mixed question of law and fact, turning on principles of natural justice and procedural fairness under GST law). Petitioner's contentions: The petitioner argued that despite the initial non-response to the show cause notice, the entire disputed tax had been recovered. They were willing to pre-deposit 50% of the disputed tax for a fresh adjudication, subject to verification of the recovery already made. They sought to quash the impugned orders as illegal, without jurisdiction, and in violation of natural justice. Revenue's contentions: The respondent (State Tax Officer) did not explicitly record any arguments in opposition to the petitioner's submissions regarding the pre-deposit and de novo adjudication. However, they were represented and took notice of the petition.
Sections Cited
Section 107, Section 128A
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Before: and
Mr.S.Venkatesh, learned Counsel for State of TN, takes notice for the respondent.
This Writ Petition is being disposed of at the time of admission with the consent of the learned counsel for the petitioner and the learned Counsel for State of TN for the respondent.
The petitioner is before this Court against the Impugned Assessment Order bearing reference in GSTIN: 33ANZPB9781H1ZD, ARN: AD330524023210V dated 31.08.2024, whereby the proposal in Show Cause Notice in DRC 01 dated 27.05.2024 (mentioned as 28.05.2024 in the impugned order) has been confirmed for the tax period of 2019-20 in absence of reply to the Show Cause Notice. 2/6 https://www.mhc.tn.gov.in/judis
The facts on record reveal that the petitioner had not responded to the Notice in DRC 01 dated 27.05.2024 as mentioned above.
It is noticed that after issuance of the Impugned Assessment Order, the petitioner had filed an application for waiver of interest or penalty or both under Section 128A. However, the same was rejected in FORM GST SPL-07 on 14.03.2026. 6. It is noticed that the limitation for filing an appeal under Section 107 of the respective GST enactments, 2017 against the impugned Order has already expired. The present Writ Petition has been filed only on 17.07.2026. 7. At this stage, the learned counsel for the petitioner submits that after the impugned order was passed, the entire disputed tax was recovered on 20.01.2025. However, the petitioner is willing to pre-deposit 50% of the disputed tax as a condition for de novo adjudication, subject to the verification of the recovery made.
The learned counsel for the petitioner has also made an endorsement to 3/6 https://www.mhc.tn.gov.in/judis that effect in the Court Bundle, which is extracted hereunder:- “The petitioner is ready to pay 50% of the disputed tax but already paid entire tax due on 20.01.2025 subject to verification.”
In view of the above, the Impugned Orders are quashed and the case is remitted back to the respondent to pass a fresh order subject to the petitioner depositing 50% of the disputed tax in cash from the petitioner's Electronic Cash Register, after deducting the amount already recovered, within a period of thirty (30) days from the date of receipt of a copy of this order, subject to the verification of the recovery made by the respondent.
Within such time, the Petitioner shall also file a reply to the Show Cause Notice in DRC 01, dated 27.05.2024 together with requisite documents to substantiate the case by treating the Impugned Order dated 31.08.2024 as an addendum to the Show Cause Notice dated 27.05.2024. 11. In case the petitioner complies with the above stipulations, the respondent shall proceed to pass a final order on merits and in accordance with 4/6 https://www.mhc.tn.gov.in/judis law as expeditiously as possible, preferably, within a period of three (3) months of such reply / pre-deposit.
In case the petitioner fails to comply with any of the stipulations, the respondent is at liberty to proceed against the petitioner 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 petitioner.
This Writ Petition stands disposed of with the above observations. No costs. Consequently, connected Writ Miscellaneous Petition is closed. Index : Yes / No 21.07.2026 Internet : Yes / No apd To The State Tax Officer, Madurai Rural (West) Assessment Circle, Madurai. 5/6 https://www.mhc.tn.gov.in/judis C.SARAVANAN, J.
apd
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.