K Palaniyappan vs. The State Tax Officer

Facts

The petitioner, K Palaniyappan, filed a Writ Petition challenging an order of assessment dated 23.03.2026, passed by the Respondent, the State Tax Officer, Virudhunagar-III Assessment Circle, under Section 74 of the Tamil Nadu Goods and Services Act, 2017. The core dispute concerns the levy of GST on seigniorage fees, a matter currently pending before the Supreme Court of India. The petitioner argued that the assessment order was passed despite this pending litigation and that their reply was not considered. They also raised a question of jurisdiction concerning Section 22 of the Act. The Respondent, through the learned Additional Government Pleader, acknowledged that while proceedings were directed to be completed, final orders were to be kept in abeyance pending the Supreme Court's decision.

Held

The Court held that the impugned order of assessment dated 23.03.2026 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 at large, pending the Supreme Court's decision. Therefore, no condition of deposit was imposed on the petitioner. The Court directed the petitioner to file an additional 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 pronounces its judgment. If the final order resulted in tax or penalty, enforcement and demand would also be kept in abeyance until the Supreme Court's judgment. The petitioner would be entitled to take further steps based on the Supreme Court's outcome. The Court expressly left undecided the ultimate tax liability, which is contingent on the Supreme Court's ruling.

Key Issues

1. Whether the impugned order of assessment dated 23.03.2026, passed by the Respondent under Section 74 of the Tamil Nadu Goods and Services Act, 2017, is liable to be quashed as illegal, without jurisdiction, and in violation of the principles of natural justice, particularly in light of the pending Supreme Court decision on the levy of GST on seigniorage fees? Petitioner's Arguments: The petitioner contended that the assessment order was passed prematurely, as the subject matter (GST on seigniorage fees) is sub judice before the Supreme Court. They argued that their reply was not considered and that the question of jurisdiction under Section 22 of the Act was also raised and needed consideration. Revenue's Arguments: The Revenue submitted that while this Court had directed proceedings to be completed, it was also directed that final orders be kept in abeyance until the Supreme Court's decision. They produced prior orders of this Court in similar matters (M/s.Marginal M sand vs. the State Tax Officer and Tvl.Rajapalayam Cement and Chemicals Limited vs. the Assistant Commissioner) which supported this stance.