Tvl. Ultra Sand vs. The State Tax Officer

Facts

The petitioner, Tvl.Ultra Sand, represented by its proprietor, filed a writ petition challenging an order of assessment dated 18.03.2026 issued by the respondent, the State Tax Officer. The assessment order was passed under Section 74 of the Tamil Nadu Goods and Services Act, 2017. The dispute pertains to the levy of GST on seigniorage fees, a matter currently pending before the Supreme Court of India. The petitioner contended that the authorities should await the Supreme Court's decision. The respondent argued that proceedings should be completed, but appellate orders were to be kept in abeyance pending the Supreme Court's judgment. The 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 the very incidence of tax was at large, pending the Supreme Court's decision on the levy of GST on seigniorage fees. Therefore, it was equitable to grant the petitioner an opportunity to present their case. The Court directed the petitioner to file a reply with supporting documents within two weeks. The respondent was to consider the matter afresh, but any final orders were to be kept in abeyance until the Supreme Court's judgment. If the assessment resulted in tax or penalty, 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 judgment. No costs were imposed. The Court expressly did not impose the usual condition of depositing 25% of the disputed amount, given the fundamental nature of the tax incidence being under consideration.

Key Issues

1. Whether the assessment proceedings should be quashed or stayed pending the decision of the Hon'ble Supreme Court of India on the levy of GST on seigniorage fees? Petitioner's argument: The petitioner argued that the subject matter of the dispute, the levy of GST on seigniorage fees, is pending before the Supreme Court of India. Therefore, the assessment proceedings should be stayed until the Supreme Court renders its decision, citing 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). Respondent's argument: The respondent contended that while appellate orders were directed to be kept in abeyance, the proceedings themselves should be completed. The respondent also pointed out that the petitioner failed to participate in the assessment proceedings and submit necessary documents.