M.M. Blue Metal vs. The Deputy State Tax Officer - 1

Facts

The petitioner, M.M. Blue Metal, represented by its partner, filed a writ petition challenging an order dated 11.11.2025 passed by the Deputy State Tax Officer. This order was an assessment order passed under Section 74 of the Tamil Nadu Goods and Services Act, 2017, pertaining to GST for the period 2018-2019. The core of the dispute involved the levy of GST on seigniorage fees. The petitioner argued that this issue was pending before the Supreme Court of India and that the High Court had previously directed authorities to await the Supreme Court's decision. The respondent contended that while proceedings were directed to be completed, final orders were to be kept in abeyance pending the Supreme Court's judgment. The petitioner had not availed the opportunity to respond to the show cause notice or submit supporting documents.

Held

The Court held that the impugned assessment order dated 11.11.2025 should be set aside and the matter remanded back to the respondent for fresh consideration. The Court acknowledged that the very incidence of tax was under dispute and pending before the Supreme Court. While the petitioner had failed to participate in the original assessment proceedings, the Court granted an opportunity for them to file their reply and supporting documents within two weeks. The respondent was directed to consider the matter afresh, but crucially, final orders were to be kept in abeyance until the Supreme Court pronounces its judgment. If the final order resulted in a tax or penalty assessment, its enforcement and demand would also be stayed pending the Supreme Court's decision. The petitioner would be entitled to take further steps based on the Supreme Court's outcome. No additional condition of deposit was imposed due to the fundamental nature of the tax incidence being in dispute.

Key Issues

1. Whether the assessment order passed by the respondent is illegal, without jurisdiction, and arbitrary, considering the pending issue of GST levy on seigniorage fees before the Supreme Court of India, and in light of previous High Court directions to await the Supreme Court's decision? (Question of law and fact, turning on Section 74 of the Tamil Nadu Goods and Services Act, 2017 and principles of natural justice). Petitioner's contention: The assessment order should be quashed as the very incidence of tax is sub-judice before the Supreme Court, and the High Court had previously directed authorities to await the Supreme Court's verdict. The petitioner also raised a ground that they were not involved in quarrying at all. Respondent's contention: The respondent argued that while the High Court had directed proceedings to be completed, it also directed that final orders be kept in abeyance until the Supreme Court's decision. The respondent highlighted that the petitioner failed to participate in the assessment proceedings and submit necessary documents.