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, issued by the Deputy State Tax Officer-2, Sivakasi, 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 Supreme Court of India. The petitioner argued that the authorities should await the Supreme Court's decision. The respondent contended that proceedings were directed to be completed, but appellate orders were to be kept in abeyance pending the Supreme Court's judgment. The High Court noted that the petitioner had not availed the opportunity during the show cause notice stage and failed to submit supporting documents.

Held

The Court held that while the assessment order had been passed, the petitioner had not availed the opportunity to present their case and submit supporting documents. Considering that the very incidence of tax was under dispute and pending before the Supreme Court, the Court decided to grant the petitioner an opportunity for fresh consideration. The impugned order dated 25.02.2026 was set aside and the matter was remanded back to the respondent. 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 or penalty, enforcement 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 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 if so, what relief should be granted? (Article 226 of the Constitution of India, Section 74 of the Tamil Nadu Goods and Services Act, 2017). Petitioner's contention: The assessment order should be quashed as the subject matter is sub judice before the Supreme Court, and the authorities should await its decision. The petitioner also relies on previous High Court orders directing authorities to await the Supreme Court's verdict. Respondent's contention: The respondent argued that while appellate orders were to be kept in abeyance, the proceedings themselves were directed to be completed. The respondent produced High Court orders in similar cases (M/s.Marginal M sand vs. State Tax Officer and Tvl.Rajapalayam Cement and Chemicals Limited vs. Assistant Commissioner) which permitted completion of proceedings but barred final orders pending the Supreme Court's decision.