Tvl. Svs Blue Metals vs. The State Tax Officer

Facts

The petitioner, Tvl.Svs Blue Metals, represented by its proprietor, filed a writ petition challenging an assessment order dated March 18, 2026, issued by the respondent, the State Tax Officer. 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 the High Court had previously directed authorities to await the Supreme Court's decision. The respondent, through the Government Standing Counsel, acknowledged that while proceedings were directed to be completed, final orders were to be kept in abeyance pending the Supreme Court's judgment. 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 assessment order dated March 18, 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 is at large, pending the Supreme Court's decision. The petitioner was granted an opportunity to file a reply with supporting documents within two weeks of receiving the order. The respondent was directed to consider the matter afresh, but importantly, final orders were to be kept in abeyance until the Supreme Court pronounces its judgment. If the final order results in tax assessment or penalty, it should be communicated to the petitioner, but enforcement and demand would also be kept in abeyance pending the Supreme Court's judgment. The petitioner would be entitled to take further steps based on the Supreme Court's outcome. No costs were imposed. The Court did not expressly leave any issue undecided, but the ultimate determination of tax liability is contingent on the Supreme Court's ruling.

Key Issues

1. Whether the assessment order passed by the respondent is illegal, arbitrary, and against the principles of natural justice, considering the pending issue of GST levy on seigniorage fees before the Supreme Court of India, and the High Court's prior directions to await the Supreme Court's decision? (Question of law and mixed fact and law, turning on principles of natural justice and judicial discipline). Petitioner's contention: The assessment order should be quashed as it violates the principles of natural justice and disregards the High Court's previous orders to await the Supreme Court's decision on the very incidence of tax. The petitioner relies on 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) where final orders were directed to be kept in abeyance. Respondent's contention: The respondent argued that the Court has been directing the completion of proceedings, but acknowledged that appellate orders were directed to be kept in abeyance until the Supreme Court's decision. The respondent produced High Court orders in similar cases where proceedings were permitted to be completed, but final orders were to await the Supreme Court's judgment.