Tvl. Loordhusamy. vs. The Deputy State Tax Officer - 1

Facts

The petitioner, Tvl. Loordhusamy, filed a Writ Petition challenging an order of assessment dated 03.02.2026, issued by the Deputy State Tax Officer-1, Pudukkottai, under Section 74 of the Tamil Nadu Goods and Services Act, 2017. The dispute pertains to the levy of GST on seigniorage fees, a matter pending before the Supreme Court of India. The petitioner contended that the authorities should await the Supreme Court's decision. The respondent argued that proceedings were directed to be completed, but appellate orders were to be kept in abeyance pending the Supreme Court's judgment. The Court noted that the petitioner did not avail the opportunity when the show cause notice was issued and failed to submit supporting documents.

Held

The Court held that the impugned assessment order dated 03.02.2026 should be set aside and remanded back to the respondent for fresh consideration. The Court reasoned that while the petitioner had not availed the opportunity to submit supporting documents when the show cause notice was issued, the very incidence of tax was under dispute and pending before the Supreme Court. Therefore, granting an opportunity to the petitioner was deemed appropriate. The Court directed the petitioner to file a reply with supporting documents within two weeks. The respondent was to consider the matter afresh, but final orders were to be kept in abeyance until the Supreme Court pronounces its judgment. If the final order results in tax or penalty, enforcement and demand would also be kept in abeyance until the Supreme Court's decision. The petitioner would be entitled to take further steps based on the Supreme Court's judgment. No costs were imposed. The issue of whether GST is leviable on seigniorage fees was expressly left undecided, pending the Supreme Court's outcome.

Key Issues

1. Whether the assessment order passed by the respondent is illegal and arbitrary, violating principles of natural justice, particularly in light of the pending Supreme Court decision on the levy of GST on seigniorage fees? (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 subject matter is sub judice before the Supreme Court, and the authorities should await its decision. The petitioner relied on previous High Court orders directing authorities to await the Supreme Court's verdict. Respondent's contention: While acknowledging that appellate orders were to be kept in abeyance, the respondent argued that proceedings were directed to be completed. The respondent referred to previous High Court orders in similar cases (M/s.Marginal M sand vs. the State Tax Officer and Tvl.Rajapalayam Cement and Chemicals Limited vs. the Assistant Commissioner) which permitted completion of proceedings but directed final orders to be kept in abeyance pending the Supreme Court's decision.