G Murugan vs. The Deputy State Tax Officer -2

Facts

The petitioner, Tvl.G.Murugan, filed a Writ Petition challenging an order of assessment 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, a matter pending before the Hon'ble Supreme Court of India. The petitioner contended that the authorities should await the Supreme Court's decision. The respondent acknowledged that while proceedings were directed to be completed, final orders were to be kept in abeyance pending the Supreme Court's judgment. The impugned assessment order was passed despite this, and the petitioner had not availed the opportunity to submit their reply and supporting documents when the show cause notice was issued.

Held

The Court held that the impugned order of assessment dated 25.02.2026 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. While the petitioner had not availed the opportunity to submit their reply and documents, the Court granted them an opportunity to do so within two weeks. The respondent was directed to consider the matter afresh. Crucially, the Court reiterated that final orders were to be kept in abeyance until the Supreme Court pronounces its judgment. If the final order results in tax assessment or penalty, enforcement and demand would also be kept in abeyance. The petitioner would be entitled to take further steps based on the Supreme Court's judgment. No costs were imposed. The Court did not impose the usual condition of a 25% deposit due to the uncertainty surrounding the incidence of tax.

Key Issues

1. Whether the assessment order passed by the respondent is illegal and arbitrary, violating principles of natural justice, given that the core issue of GST levy on seigniorage fees is pending before the Supreme Court of India, and whether Section 74 of the Tamil Nadu Goods and Services Act, 2017, was correctly applied in this context? Petitioner's Contention: The petitioner argued that the assessment order should be quashed as the subject matter is sub-judice before the Supreme Court of India, and the authorities were previously directed to await the Supreme Court's decision. They relied on previous orders of this Court in similar matters. Respondent's Contention: The respondent submitted that while previous directions indicated keeping orders in abeyance, the Court had also directed the completion of proceedings. They produced orders from this Court in W.P(MD)No.22159 of 2025 etc. and W.P(MD)No.32352 of 2025, which allowed completion of proceedings but stipulated that final orders should not be passed pending the Supreme Court's judgment. The respondent also noted the petitioner's failure to submit a reply and supporting documents.