Tvl Chellam Motors Private Limited vs. The State Tax Officer - V (Roving Squad)

Facts

The petitioner, Tvl. Chellam Motors Private Limited, filed a writ petition challenging an assessment order for the year 2020-21, a rejection order of a rectification application, and a consequential Form GST DRC-07. The impugned orders were passed by the State Tax Officer-V (Roving Squad) and the Commercial Tax Officer, both of the Commercial Taxes Department, Intelligence Trichy Division. The petitioner sought to quash these orders as arbitrary, void, contrary to Section 168A of the CGST Act, 2017, and violative of constitutional provisions. The core of the challenge revolved around the procedural compliance by the revenue authorities in issuing the demand order.

Held

The Court held that the impugned order suffered from the vice of arbitrariness. The reasoning was that a perusal of the order revealed that the Assessing Officer had not made any determination of the tax payable by the petitioner as envisaged under Section 74 of the Act. Additionally, the Court found that the Assessing Officer had not followed the guidelines issued in Circular No. 8/2024. Consequently, the Court found the order liable to be interfered with. The ratio decidendi is that statutory provisions and departmental circulars prescribing procedural fairness must be followed by tax authorities; non-compliance renders the order arbitrary and liable for setting aside. The Court allowed the writ petition, set aside the impugned order, and remitted the matter back to the first respondent for fresh consideration. The petitioner was directed to file a reply with supporting documents within two weeks, after which the first respondent was to provide a hearing and pass a reasoned order within eight weeks.

Key Issues

1. Whether the Assessing Officer followed the procedure prescribed under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017, which mandates a determination of the proposal made in the show cause notice before issuing an order of demand? 2. Whether the Assessing Officer adhered to the guidelines stipulated in Circular No. 8/2024, dated 29.08.2024, issued by the Commissioner of State Tax, while passing the order of demand? Petitioner's Arguments: The petitioner contended that the Assessing Officer failed to invoke the provisions of Section 74 of the Act, which requires a determination of the tax payable after considering the show cause notice. Furthermore, the petitioner argued that the Assessing Officer did not follow the procedural guidelines laid down in Circular No. 8/2024. Revenue's Arguments: The judgment does not record any specific arguments made by the respondents (revenue).