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

Facts

The petitioner, Tvl. R. Saratha, represented by its proprietor, 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 dispute concerns the levy of GST on seigniorage fees. The petitioner contended that this issue is 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 argued that while proceedings were directed to be completed, final orders were to be kept in abeyance pending the Supreme Court's judgment. The impugned order was passed despite this, as 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 order of assessment dated 03.11.2025 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 avail the opportunity to respond to the show cause notice, the Court granted an opportunity for fresh consideration on equitable grounds. The petitioner was directed to file a reply with supporting documents within two weeks. The respondent was 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, its enforcement 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 judgment.

Key Issues

1. Whether the assessment order passed by the respondent is liable to be quashed in light of the pending Supreme Court proceedings on the levy of GST on seigniorage fees, and the High Court's prior directions to await the Supreme Court's decision? (Question of law) Petitioner's Arguments: The petitioner argued that the subject matter of the dispute, the levy of GST on seigniorage fees, is pending before the Supreme Court of India. They relied on previous High Court orders directing authorities to await the Supreme Court's decision. Therefore, the assessment order should be quashed. Respondent's Arguments: The respondent contended that while the High Court had directed proceedings to be completed, it also stipulated that final orders should be kept in abeyance until the Supreme Court's decision. The respondent referred to previous High Court orders in similar matters (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 prohibited the passing of final orders pending the Supreme Court's judgment.