Tvl, Zion Agencies vs. The Deputy State Tax Officer I

Facts

The petitioner, TVL, Zion Agencies, represented by its Proprietor, Soosai Micheal Gladston, filed a writ petition before the Madurai Bench of the Madras High Court. The petition challenged an assessment order dated 12.12.2023, passed by the respondent, The Deputy State Tax Officer-I, Thuckalay-2, for the tax period 2017-18. This order was preceded by several notices, including Form ASMT-10 and Form DRC-01A, and personal hearing notices. The petitioner had not participated in the adjudication process, leading to an adverse order. Subsequently, a demand notice dated 12.03.2024 was issued, demanding payment of a disputed tax amount of Rs.50,11,324/-.

Held

The Court decided to quash the impugned assessment order dated 12.12.2023, subject to certain conditions. The primary finding was that the petitioner had not participated in the adjudication process, resulting in an adverse order. The Court, referencing similar circumstances where it had intervened, found no reason to deviate from that approach. The ratio decidendi is that in cases where an assessee fails to participate in the adjudication process, leading to an adverse order, the High Court may grant relief by quashing the order on terms, provided the assessee demonstrates a willingness to comply with the stipulated conditions. The operative directions included quashing the impugned order upon the petitioner depositing 25% of the disputed tax amount of Rs.50,11,324/- within 30 days. The petitioner was also directed to file a reply to the show cause notice within a specified time, treating the quashed order as an addendum. The respondent was directed to pass a fresh order on merits after hearing the petitioner. The Court made it clear that failure to comply with these conditions would result in the writ petition being deemed dismissed.

Key Issues

1. Whether the assessment order dated 12.12.2023, passed by the respondent without the petitioner's participation, is liable to be quashed? The petitioner argued that they did not participate in the adjudication mechanism and consequently suffered an adverse order. They sought to quash the impugned order and requested an opportunity to produce documents and have fresh orders passed on merits. The respondent, represented by the Additional Government Pleader, did not record any specific arguments in the judgment. The Court considered the circumstances and the fact that the petitioner had not participated in the adjudication process, leading to an adverse order against them.