Tvl. G Murugan vs. The Deputy State Tax Officer-2

Facts

The petitioner, Tvl.G.Murugan, filed a Writ Petition challenging an assessment order dated 25.02.2026, passed by the respondent, the Deputy State Tax Officer-2, under Section 74 of the Tamil Nadu Goods and Services Act, 2017. The dispute concerns the levy of GST on seigniorage fees. The petitioner argued that this issue is pending before the Supreme Court of India, and the authorities should await its decision. The respondent contended that while proceedings were directed to be completed, 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. The Court noted that the very incidence of tax was under dispute.

Held

The Court held that the impugned assessment order dated 25.02.2026, passed by the respondent, should be set aside and the matter remanded back to the respondent for fresh consideration. The Court acknowledged that the petitioner had not availed the opportunity to respond to the show cause notice. However, considering that the very incidence of tax was under dispute and pending before the Supreme Court of India, the Court granted an opportunity to the petitioner. The petitioner was directed to file a reply with supporting documents within two weeks. The respondent was to consider the matter afresh, but crucially, 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 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 assessment order passed by the respondent is illegal, arbitrary, and against the principles of natural justice, considering the pending issue of GST levy on seigniorage fees before the Supreme Court of India, as contemplated under Section 74 of the Tamil Nadu Goods and Services Act, 2017? Petitioner's contention: The petitioner argued that the assessment order should be quashed as the core issue of GST on seigniorage fees is sub-judice before the Supreme Court of India. They relied on previous High Court orders directing authorities to await the Supreme Court's decision. Respondent's contention: The respondent submitted that while proceedings were to be completed, final orders were to be kept in abeyance until the Supreme Court's decision. They produced High Court orders in similar cases (M/s.Marginal M sand vs. the State Tax Officer and Tvl.Rajapalayam Cement and Chemicals Limited vs. the Assistant Commissioner) which permitted completion of proceedings but mandated awaiting the Supreme Court's judgment before passing final orders.