M/S.Hotel Staar World vs. The Deputy State Tax Officer 1

Facts

The petitioner, M/s. Hotel Staar World, filed a Writ Petition challenging an Assessment Order dated 02.03.2026, a consequential Form GST DRC-07 dated 02.03.2026, and a rectification order dated 02.03.2026, all issued by the Deputy State Tax Officer. These orders confirmed a proposal in a Show Cause Notice dated 08.01.2025, allegedly in the absence of a reply from the petitioner. The petitioner filed the Writ Petition on 25.09.2026, after the limitation period for filing an appeal under Section 107 of the respective GST enactments had expired. The petitioner expressed willingness to pre-deposit 25% of the disputed tax demand.

Held

The Court quashed the impugned assessment and rectification orders. The primary reasoning was based on the petitioner's willingness to pre-deposit 25% of the disputed tax demand. This offer was accepted by the Court as a condition for remitting the case back to the respondent for de novo adjudication. The Court directed the petitioner to deposit 25% of the disputed tax in cash from their Electronic Cash Register within thirty days of receiving the order. Concurrently, the petitioner was instructed to file a reply to the Show Cause Notice dated 08.01.2025, along with supporting documents, treating the impugned order as an addendum to the Show Cause Notice. The respondent was directed to pass a fresh order on merits within three months of the petitioner's compliance. The Court also stipulated that if the petitioner failed to comply with these conditions, the respondent could recover the tax as if the Writ Petition was dismissed in limine. The respondent was also mandated to provide due notice to the petitioner before passing any further order. No issue was expressly left undecided.

Key Issues

1. Whether the impugned assessment and rectification orders, passed without considering a reply from the petitioner, are illegal and violative of principles of natural justice, particularly when the statutory appeal period has expired? The petitioner argued that the orders were passed arbitrarily and in violation of natural justice, as their reply to the Show Cause Notice was not considered. They sought quashing of the orders. The petitioner also offered to pre-deposit 25% of the disputed tax demand as a condition for de novo adjudication. The respondent, represented by the Government Advocate (Taxes), did not explicitly record any arguments in the judgment. However, by taking notice and appearing, they implicitly defended the impugned orders.