Tvl.R.Saratha vs. The Deputy State Tax Officer- 2

Facts

The petitioner, Tvl.R.Saratha, represented by its Proprietor R.Saratha, filed a Writ Petition challenging an order of assessment dated 03.11.2025, issued by the Deputy State Tax Officer-2, Manapparai Assessment Circle. The assessment order was passed under Section 74 of the Tamil Nadu Goods and Services Act, 2017. The subject matter of the dispute pertains to the levy of GST on seigniorage fees, which is currently pending before the Hon'ble Supreme Court of India. The petitioner contended that the High Court had previously held that authorities should await the Supreme Court's decision on this matter. The respondent acknowledged that while proceedings were directed to be completed, final orders were to be kept in abeyance pending the Supreme Court's judgment.

Held

The Court held that the impugned order of assessment dated 03.11.2025 should be set aside and the matter remanded back to the respondent for fresh consideration. The Court noted that the petitioner had not availed the opportunity when the show cause notice was issued and failed to submit supporting documents. However, considering that the very incidence of tax was at large pending the Supreme Court's decision, the Court granted an opportunity to the petitioner. The petitioner was directed 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 resulted in tax assessment or penalty, enforcement and demand would also be kept in abeyance until the Supreme Court's judgment. The petitioner would be entitled to take further steps subject to the Supreme Court's outcome. No costs were imposed. The Court did not impose the usual condition of 25% deposit due to the fundamental issue of tax incidence being undecided.

Key Issues

1. Whether the impugned assessment order dated 03.11.2025, passed under Section 74 of the Tamil Nadu Goods and Services Act, 2017, is liable to be quashed or set aside, considering the pendency of the issue of levy of GST on seigniorage fees before the Hon'ble Supreme Court of India? Petitioner's contention: The petitioner argued that the levy of GST on seigniorage fees is a subject matter pending before the Hon'ble Supreme Court of India. They relied on previous High Court orders directing authorities to await the Supreme Court's decision. Respondent's contention: The respondent submitted that the High Court had been directing the completion of proceedings, but acknowledged that appellate orders were to be kept in abeyance until the Supreme Court's decision. They referred to 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 the completion of proceedings but stipulated that final orders should not be passed and should await the Supreme Court's judgment.