Saratha Fancy A TO Z vs. The Deputy State Tax Officer - Ii

Facts

The petitioner, Saratha Fancy A to Z, filed a writ petition challenging an order dated 26.12.2025 passed by the Deputy State Tax Officer - II, Thiruppathur Assessment Circle. This order confirmed a demand proposed in a notice dated 24.09.2025, after considering the petitioner's reply dated 06.10.2025. The petitioner had failed to appear for a personal hearing and to substantiate their claim of tax exemption for supplying groceries, which are reportedly exempted under Notification No.2/2017-Central Tax (Rate) and corresponding state notifications. The court noted that the respondent authority had not erred in confirming the demand based on the available information.

Held

The Court held that while the respondent authority had not erred in confirming the demand based on the petitioner's failure to appear for a personal hearing and substantiate their exemption claim, there was merit in considering the petitioner's assertion of exemption for supplying groceries. The Court noted the relevant exemption notification (Notification No.2/2017-Central Tax (Rate)) and corresponding state notifications. Consequently, the Court decided to remit the case back to the respondent for a fresh order. This was made conditional upon the petitioner depositing 10% of the disputed tax within thirty days and filing a proper/additional reply to the show cause notice along with supporting documents. The impugned order was quashed, and the respondent was directed to pass a fresh order on merits after considering the petitioner's submissions and the pre-deposit. The attachment of the petitioner's bank account, if any, would be vacated upon compliance with these stipulations.

Key Issues

1. Whether the impugned order dated 26.12.2025, confirming the tax demand, is sustainable in light of the petitioner's claim of exemption for supplying groceries, as per Notification No.2/2017-Central Tax (Rate) and corresponding state notifications? Petitioner's contention: The petitioner argued that they were exempted from payment of tax as they were engaged in the supply of groceries, which falls under the purview of tax exemption notifications. They sought to quash the impugned order. Respondent's contention: The respondent, represented by the State counsel, did not explicitly argue against the petitioner's claim of exemption. The judgment notes that the petitioner failed to substantiate their claim and did not appear for a personal hearing, leading to the confirmation of the demand. The respondent's counsel took notice of the writ petition and consented to its disposal at the admission stage.