M/S. Mathan Pattasu Kadai vs. The Joint Commissioner Intelligence (St)
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The petitioner, M/s. Mathan Pattasu Kadai, represented by its partner N. Madhan, filed a writ petition challenging an order dated 11.05.2026 passed by the 2nd respondent, the State Tax Officer - I (Inspection). This order confirmed a proposal in a show cause notice dated 20.01.2026 for the tax period 2020-2021, issued by the same respondent. The petitioner argued that the respondents treated the income of the partner as the income of the firm, which was registered only on 11.07.2022. The respondents concluded tax evasion based on amounts credited to the petitioner's partner's bank account during the period when the firm was not yet registered. The petitioner approached the High Court within the limitation period for filing an appeal.
Held
The Court held that the impugned order dated 11.05.2026, which confirmed the proposal in the show cause notice dated 20.01.2026, was to be quashed. The Court noted that the petitioner had approached the Court within the period of limitation prescribed for filing an appeal under Section 107 of the Act. Furthermore, the Court observed that prima facie, the turnover during the period in question appeared to be within the exemption prescribed under Section 22 of the respective GST enactment. Consequently, the Court remitted the case back to the second respondent for a fresh order. The petitioner was directed to file a proper reply to the show cause notice, treating the impugned order as an addendum, along with necessary documents, within 30 days. The second respondent was directed to pass a final order on merits and in accordance with law expeditiously, preferably within three months of receiving the reply. The Court also stipulated that if the petitioner failed to comply, the second respondent could proceed to recover the tax as if the writ petition was dismissed. The second respondent was also mandated to issue due notice before passing any order.
Key Issues
1. Whether the impugned order dated 11.05.2026, confirming the proposal in the show cause notice dated 20.01.2026 for the tax period 2020-2021, is legally sustainable, considering the petitioner firm was registered only on 11.07.2022 and the turnover during the period might fall within the exemption prescribed under Section 22 of the respective GST enactment? (Question of law and mixed fact and law, turning on Section 22 of the GST enactment and principles of natural justice). Petitioner's arguments: The petitioner contended that the respondents erred in treating the partner's income as the firm's income when the firm was not registered during the relevant tax period. They also argued that the turnover during the period in question might be within the exemption limit prescribed under Section 22 of the GST enactment. The petitioner sought to quash the impugned order and sought a fresh adjudication after affording an opportunity. Respondents' arguments: The respondents, represented by the State counsel, did not record any specific arguments against the petitioner's contentions in the judgment. They acknowledged notice and consented to the disposal of the writ petition at the admission stage.
Sections Cited
Section 22, Section 107
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Before: and
Mr.R.Parthiban, learned counsel for the State of Tamil Nadu, takes notice for the respondents. 2.By consent, this writ petition is disposed of at the time of admission, after hearing the learned counsel for the petitioner and the learned counsel for the State of Tamil Nadu appearing for the respondents. 3.The petitioner is before this Court against the impugned order dated 11.05.2026, whereby the proposal in the show cause notice in DRC 01 dated 20.01.2026 issued to the petitioner for the tax period 2020-21 has been confirmed in the absence of a reply to the show cause notice dated 20.01.2026. 4.The case of the petitioner is that the income of the partner of the petitioner firm has been treated as the income of the petitioner firm, which was registered only on 11.07.2022. It is submitted that the respondents have come to a conclusion that during the aforesaid period, the petitioner has 2/6 https://www.mhc.tn.gov.in/judis evaded tax based on the amounts credited to the bank account of the petitioner's partner. 5.Having considered the submissions made by the learned counsel for the petitioner and the learned counsel for the respondent and taking note of the fact that the petitioner has approached this Court within the period of limitation prescribed for filing an appeal under Section 107 of the ACT and also taking note of the fact that prima facie the turnover during the aforesaid period was within the exemption prescribed under Section 22 of the respective GST enactment, I am inclined to quash the impugned order and remit the case back to the second respondent to pass a fresh order. 6.It is for the petitioner to substantiate the case properly by giving a proper reply to the show cause notice in DRC 01 dated 20.01.2026 by treating the impugned order dated 11.05.2026 as an addendum to the show cause notice dated 20.01.2026 along with necessary documents, within a period of 30 days from the date of receipt of a copy of this order and to give additional written submission, if any, within such time. 3/6 https://www.mhc.tn.gov.in/judis
In case, the petitioner complies with the above stipulations, the second 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 months of such reply. 8.In case, the petitioner fails to comply with any of the stipulations, the second 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. 9.Needless to state, before passing any such order, the second respondent shall issue due notice on the petitioner. 10.This Writ Petition stands disposed of with the above observations. No costs. Consequently, connected Miscellaneous Petitions are closed. Index : Yes / No 20.07.2026 Internet : Yes / No mm 4/6 https://www.mhc.tn.gov.in/judis To 1.The Joint Commissioner Intelligence (St) Virudhunagar- II Virudhunagar-626117. 2.The State Tax Officer - I (Inspection) Virudhunagar Intelligence, Virudhunagar-626117 5/6 https://www.mhc.tn.gov.in/judis C.SARAVANAN, J.
mm
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.