Tvl. Svs Blue Metals vs. The State Tax Officer

Facts

The petitioner, Tvl. Svs Blue Metals, represented by its Proprietor S. Radhakrishnan, filed a writ petition challenging an assessment order dated 18.03.2026, 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 that 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 judgment. The High Court noted that 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 18.03.2026 should be set aside and the matter remanded back to the respondent for fresh consideration. The Court reasoned that while the petitioner had failed to participate in the assessment proceedings, the underlying issue of the taxability of seigniorage fees was pending before the Supreme Court. Therefore, granting the petitioner an opportunity to present their case was appropriate. The Court directed the petitioner to file their 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 favoured the petitioner, no further action was needed. If it resulted in tax or penalty, enforcement would be stayed pending the Supreme Court's decision. The ratio is that in cases where the very incidence of tax is under judicial review by a higher court, even if a party defaults in proceedings, an opportunity should be granted, with the final outcome contingent on the higher court's decision.

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? (Section 74 of the Tamil Nadu Goods and Services Act, 2017). 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 mandated awaiting the Supreme Court's verdict. Respondent's contention: The respondent argued that while the High Court directed proceedings to be completed, final orders were to be kept in abeyance until the Supreme Court's decision. The respondent also highlighted the petitioner's failure to respond to the show cause notice and submit supporting documents.