Tvl. Ultra Sand vs. The State Tax Officer

Facts

The petitioner, Tvl.Ultra Sand, filed a writ petition challenging an order of assessment dated 18.03.2026 passed by the respondent, the State Tax Officer, 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, as previously directed by this Court in similar matters. The respondent contended that while proceedings should be completed, final orders should 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 allowed the writ petition and set aside the impugned order dated 18.03.2026, remanding the matter back to the respondent for fresh consideration. The Court reasoned that since the very incidence of tax was at large, pending the decision of the Supreme Court of India on the levy of GST on seigniorage fees, it was appropriate to grant the petitioner an opportunity to present their case. The petitioner was directed to file a reply with supporting documents within two weeks. The respondent was to consider the matter afresh, but final orders were to be kept in abeyance until the Supreme Court's judgment. If the final order resulted in tax assessment 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 issue of whether the petitioner had a valid defence on merits was expressly left undecided, with the focus being on procedural fairness and awaiting the apex court's ruling.

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 arguments: The petitioner contended that the subject matter of the dispute, the levy of GST on seigniorage fees, is currently pending before the Hon'ble Supreme Court of India. Therefore, the respondent should await the outcome of the Supreme Court's decision, aligning with previous orders of this Court in similar cases. The petitioner sought to quash the impugned order as illegal, arbitrary, and against the principles of natural justice. Respondent's arguments: The learned Government Standing Counsel submitted that while this Court has been directing the completion of proceedings, it has also directed that the orders of the Appellate Authority be kept in abeyance until the Hon'ble Supreme Court of India passes its orders. The respondent also pointed out that the petitioner failed to avail the opportunity when the show cause notice was issued and did not submit necessary supporting documents.