P. Kalavathi vs. The Proper Officer / The Deputy State Tax Officer - 2

Facts

The petitioner, P. Kalavathi, filed a writ petition challenging an assessment order dated 25.02.2026 passed by the Proper Officer/Deputy State Tax Officer-2, Thirumangalam Assessment Circle, Madurai, under Section 76 of the TNGST Act, 2017. The assessment was made ex-parte. The petitioner argued that she was a sub-contractor providing services to a local body, and the main contractor had already paid GST on the contract amount, meaning there was no revenue loss to the department. She contended that the impugned order resulted in double taxation. The petitioner also stated that the show cause notice and impugned order were uploaded to the GST online portal only after six years from the date of RC cancellation, making it impossible to file a reply within the stipulated time. The respondent contended that the order was served by registered post and the petitioner failed to utilize the opportunities provided.

Held

The Court held that an opportunity should be granted to the assessee to present their submissions and produce relevant supporting documents before the respondent assessing officer, considering the nature of the discrepancies, the explanation provided by the assessee, and the reason given for not availing the opportunity. The Court decided to grant this opportunity on equitable grounds, subject to certain conditions. The impugned order dated 25.02.2026 was set aside, and the matter was remanded back to the respondent. The petitioner was directed to deposit 25% of the disputed tax amount within four weeks. Upon deposit, the respondent was to consider the matter afresh and pass orders in accordance with law. Any attachment of the bank account made pursuant to the impugned order was also to be raised. The Court did not expressly leave any issue undecided.

Key Issues

1. Whether the ex-parte assessment order passed under Section 76 of the TNGST Act, 2017, is liable to be quashed on the grounds of violation of principles of natural justice and lack of jurisdiction, considering the petitioner's explanation for non-participation? Petitioner's Arguments: The petitioner argued that the assessment order was illegal and passed without jurisdiction, violating principles of natural justice. She contended that the assessment resulted in double taxation as the main contractor had already paid GST. Furthermore, she claimed that the show cause notice and impugned order were uploaded to the GST portal only after a significant delay (six years from RC cancellation), preventing her from filing a timely reply. She asserted that she could explain the matter with connected records if an opportunity was granted. Respondent's Arguments: The respondent argued that the impugned order was served on the petitioner by registered post and that the petitioner did not utilize the opportunities provided for assessment.