Tvl Muthaiyah Blue Metals vs. The State Tax Officer

Facts

The petitioner, Tvl Muthaiyah Blue Metals, filed a Writ Petition challenging an order of assessment dated 09.02.2026 passed by the respondent, the State Tax Officer. The dispute concerns the levy of GST on seigniorage fees. The petitioner argued that this issue is pending before the Supreme Court of India, and the High Court had previously directed authorities to await the Supreme Court's decision. The respondent contended that while proceedings were to be completed, final orders were to be kept in abeyance pending the Supreme Court's ruling. The High Court noted that the petitioner had not availed the opportunity to respond to the show cause notice and submit supporting documents.

Held

The Court held that the impugned assessment order dated 09.02.2026 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 assessment proceedings, the Court granted an opportunity for reconsideration on equitable grounds. The Court directed the petitioner to file a reply with supporting documents within two weeks. Crucially, the Court ordered that final orders should be kept in abeyance until the Supreme Court pronounces its judgment. If the final order results in tax or penalty, its enforcement shall 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. No costs were imposed.

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? (Mixed 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 core issue of GST on seigniorage fees is sub-judice before the Supreme Court, and previous High Court orders directed authorities to await the Supreme Court's decision. The petitioner relied on prior High Court orders in similar matters. Respondent's contention: While acknowledging the direction to await the Supreme Court's orders, the respondent argued that proceedings were permitted to be completed. The respondent did not explicitly argue against the petitioner's claim regarding the pending Supreme Court case but highlighted the petitioner's failure to participate in the assessment proceedings.