Tvl.R.Saratha vs. The Deputy State Tax Officer-2

Facts

The petitioner, Tvl.R.Saratha, represented by its proprietor R.Saratha, filed a writ petition challenging an order of assessment dated 19.02.2026, issued by the Deputy State Tax Officer-2, Manapparai Assessment Circle, under Section 74 of the Tamil Nadu Goods and Services Act, 2017. The dispute concerns the levy of GST on seigniorage fees, a matter currently pending before the Supreme Court of India. The petitioner argued that the authorities should await the Supreme Court's decision. The respondents contended that proceedings should be completed, but acknowledged that 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 order of assessment dated 19.02.2026, passed under Section 74 of the Tamil Nadu Goods and Services Act, 2017, 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. Therefore, it granted the petitioner an opportunity to file a reply 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 any assessment or penalty was determined, its enforcement and demand would also be stayed pending the Supreme Court's decision. The petitioner would be entitled to take further steps based on the Supreme Court's outcome. No costs were imposed.

Key Issues

1. Whether the impugned assessment order, passed under Section 74 of the Tamil Nadu Goods and Services Act, 2017, is liable to be quashed given that the core issue of GST levy on seigniorage fees is pending before the Supreme Court of India? Petitioner's contention: The petitioner argued that the assessment order should not have been passed and that the authorities ought to have awaited the final decision of the Supreme Court of India, citing previous High Court orders in similar matters. They relied on the principle that when a substantive issue is sub-judice before a higher court, subordinate authorities should defer their decisions. Revenue's contention: The revenue, represented by the learned Additional Government Pleader, submitted that while the High Court had directed proceedings to be completed, it also mandated that final orders be kept in abeyance until the Supreme Court's decision. They produced prior High Court orders supporting this stance.