Tvl. Sri Jayamurugan Transport vs. The State Tax Officer (Fac)

Facts

The petitioner, Tvl.Sri Jayamurugan Transport, filed a writ petition challenging an assessment order dated 30.03.2026 passed by the respondent, the State Tax Officer (FAC), under Section 74 of the Tamil Nadu Goods and Services Act, 2017. The dispute concerns the levy of GST on seigniorage fees, a matter pending before the Supreme Court of India. The petitioner argued that the assessment order should not have been passed pending the Supreme Court's decision, citing previous High Court orders. The respondent contended that while proceedings were directed to be completed, final orders were to be kept in abeyance until the Supreme Court's decision. The petitioner had not availed the opportunity to respond to the show cause notice or submit supporting documents.

Held

The Court held that the assessment order dated 30.03.2026 was to 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. Therefore, it granted the petitioner an opportunity to file their reply along with 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 tax assessment 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 the petitioner's failure to submit documents earlier was a valid ground for assessment was implicitly addressed by granting a fresh opportunity.

Key Issues

1. Whether the assessment order passed by the respondent under Section 74 of the Tamil Nadu Goods and Services Act, 2017, is illegal and arbitrary, given that the issue of GST on seigniorage fees is pending before the Supreme Court of India? Petitioner's arguments: The petitioner contended that the assessment order was passed prematurely and in contravention of previous High Court directions which stipulated that final orders should await the Supreme Court's decision on the levy of GST on seigniorage fees. They relied on the principle that matters pending before a higher court should not be adjudicated by lower authorities without considering the outcome of the higher court's proceedings. Respondent's arguments: The respondent argued that while the High Court had directed proceedings to be completed, it was also directed that the final orders be kept in abeyance until the Supreme Court's decision. The respondent also noted the petitioner's failure to participate in the assessment proceedings and submit supporting documents.