M.Palraj vs. The Commissioner Of State Tax

Facts

The petitioner, M. Palraj, filed a writ petition before the Madurai Bench of the Madras High Court challenging an assessment order dated 01.12.2025, issued by the third respondent, the State Tax Officer, Sankarankovil Assessment Circle. This order, in FORM GST DRC-07, was passed under Section 73 of the TNGST/CGST Acts, 2017, for the Financial Year 2021-22. The impugned order demanded a total of Rs. 2,88,680, comprising tax of Rs. 1,53,438, interest of Rs. 1,15,242, and penalty of Rs. 20,000. The petitioner contended that the assessment order was passed without any reply to the show cause notice. The respondents, represented by the Counsel for State of TN, had no objection to the case being remitted for fresh consideration.

Held

The Court quashed the impugned assessment order dated 01.12.2025, subject to the petitioner depositing 25% of the disputed tax in cash within thirty days of receiving the order. The Court directed the petitioner to file a reply to the notice in DRC 01 dated 06.08.2025, treating the impugned order as an addendum to the Show Cause Notice. The third respondent was instructed to pass fresh orders on merits and in accordance with law, preferably within three months after hearing the petitioner, if the petitioner complied with the stipulated conditions. The Court also noted that if the petitioner failed to comply, the respondents were at liberty to proceed as if the writ petition was dismissed. The ratio decidendi is that an assessment order passed without considering the assessee's response to a show cause notice, especially when the assessee offers to comply with pre-conditions for a fresh adjudication, warrants a remand for proper consideration.

Key Issues

1. Whether the impugned assessment order passed under Section 73 of the TNGST/CGST Acts, 2017, is liable to be set aside due to being passed without considering the petitioner's reply to the show cause notice? Petitioner's contention: The petitioner argued that the assessment order was passed without providing an opportunity to reply to the show cause notice, rendering it invalid. The petitioner undertook to deposit 25% of the disputed tax as a condition for fresh adjudication. Respondents' contention: The Counsel for State of TN for the respondents had no objection to the case being remitted back to the third respondent for passing a fresh order.