Tvl. Kavibharathy And Co vs. The State Tax Officer

This writ petition challenges the impugned order dated 18.03.2025 which is an assessment order passed for the assessment year 2023-2024 under Section 73 of the GST Act 2017. 2.I have heard the learned counsel for the petitioner and the learned Additional Government Pleader representing the revenue. 3.By the impugned order, the assessment was made ex-parte because the petitioner did not utilise the opportunities provided. The discrepancies and grounds on which the assessment order was issued, the dealer's explanation on merits, and the reasons for not participating in the assessment proceedings are summarised briefly and presented in a table below: 2 https://www.mhc.tn.gov.in/judis Discrepancies found/grounds on which the order is passed Explanation offered by the Assessee on merits Explanation for not availing the opportunity wrongful availment of ITC to the tune of Rs. 10,34,124/- by invoking Section 17(5) of the TNGST Act. The petitioner is engaged in manpower supply services, wherein transportation of employees is integral to the taxable outward supply. Expenses on vehicles and related maintenance are incurred wholly in the course and furtherence of business and hence eligible for ITC under Section 16. ITC on motor vehicle related expenses such as vehicle hire, maintenance, batteries,

tryes

and insurance was disallowed on a blanket basis. Section 17(5) is a restrictive provision and cannot be applied mechanically ad vehicles used for providing taxable services fall outside is bar.

Maintenance expenses such as batteries and tyres are incidental to business use of vehicles and cannot be independently disallowed. The order proceeds merely on tabulation of invoices without assigning reasons or establishing nexus with blocked credit provisions. The respondent failed to examine transaction wise usage and wrongly made a blanket

disallowance without

establishing personal or non-business use. The proceedings were uploaded only on the GST portal without proper communication

under Section 169 and the petitioner, relying on a part- time acountant was unaware of the notices and hearing. Due to this bona fide lapse, no reply or appearance was made, resulting in an ex- parte order passed in violation of principles of natural justice. 4.Considering the nature of the discrepancies noted, the explanation provided by the assessee and the reason given before this Court for not availing the opportunity, I believe that an opportunity can be granted to the assessee to present their submissions and produce the relevant supporting documents before the respondent assessing officer. This Court has been extending such opportunities on equitable grounds; however under 3 https://www.mhc.tn.gov.in/judis appropriate conditions. Therefore, an opportunity is granted to the petitioner assessee on the condition of depositing 25% of the disputed tax amount. 5.In view thereof, the Writ Petition is allowed on the following terms: (i)Within a period of four weeks from the date of receipt of web copy of the order, the petitioner shall deposit 25% of the disputed tax amount with the respondent, without waiting for a certified copy of the order. (ii)Upon such deposit, the impugned order dated 18.03.2026 shall stand set aside, and the matter shall stand remanded back to the file of the respondent. (iii)The assessee shall appear before the respondent without fail and submit their reply and documents in support of their claim, and it is for the respondent to consider the matter afresh and pass orders in accordance with law. (iv)Since the impugned order of assessment is set aside, any attachment of the bank account made pursuant to the impugned order shall raised. (v)No costs. Consequently, connected miscellaneous petition is closed. 20.04.2026 NCC:Yes/No 4 https://www.mhc.tn.gov.in/judis To The State Tax Officer, Pudukkottai - III Assessment Circle, Commercial Taxes Buildings, Pudukkottai. 5 https://www.mhc.tn.gov.in/judis D.BHARATHA CHAKRAVARTHY, J. Ns and W.M.P(MD)No.8615 of 2026 20.04.2026 6 https://www.mhc.tn.gov.in/judis