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

Facts

The petitioner, Tvl.Sri Jayamurugan Transport, filed a writ petition challenging an order of assessment dated March 24, 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, an issue pending before the Supreme Court of India. The petitioner argued that the respondent should await the Supreme Court's decision. The respondent contended 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 while the assessment proceedings could be completed, the final orders should be kept in abeyance until the Supreme Court of India delivers its judgment on the levy of GST on seigniorage fees. The Court acknowledged that the petitioner had not availed the opportunity to respond to the show cause notice and submit supporting documents. On equitable considerations, and noting that the very incidence of tax was at large, the Court set aside the impugned order dated March 24, 2026, and remanded the matter back to the respondent for fresh consideration. The petitioner was directed to file their reply with supporting documents within two weeks. The respondent was to consider the matter afresh, but final orders were to be kept in abeyance. If the outcome resulted in tax or penalty, enforcement and demand would also be stayed until the Supreme Court's judgment. The petitioner would be entitled to take further steps based on the Supreme Court's decision.

Key Issues

1. Whether the assessment proceedings under Section 74 of the Tamil Nadu Goods and Services Act, 2017, should be quashed or stayed pending the decision of the Supreme Court of India on the levy of GST on seigniorage fees? Petitioner's contention: The petitioner argued that the assessment order should be quashed as the very incidence of tax is under dispute before the Supreme Court. They relied on previous High Court orders directing authorities to await the Supreme Court's decision. Respondent's contention: The respondent argued that while the High Court had directed proceedings to be completed, final orders were to be kept in abeyance until the Supreme Court's decision. They produced prior High Court orders to this effect.