Tvl. Shona vs. The Deputy State Tax Officer - 1 / The Deputy Commercial Tax Officer

Facts

The petitioner, Tvl. Shona, represented by its Partner Sankara Narayanan, filed two writ petitions challenging assessment and rectification orders passed by the Deputy State Tax Officer - 1, Palayamkottai Assessment Circle, for the assessment year 2019-20. In W.P.(MD) No. 24944 of 2026, the petitioner challenged an assessment order dated 17.08.2024 and a rectification order dated 12.11.2024. In W.P.(MD) No. 24945 of 2026, the petitioner challenged an order dated 30.08.2024 and a rectification order dated 30.12.2024. The petitioner argued that the demand confirmed in the first order was subsumed in the second order, and further recovery was made from the petitioner's bank account. The respondent partly agreed that a portion of the demand was subsumed but could not confirm if the amount confirmed in the first order was also recovered again.

Held

The Court quashed the impugned assessment and rectification orders in both writ petitions. The Court found merit in the petitioner's submission regarding the overlap and duplication of demands. The Court directed the respondent to pass a fresh composite order. As a condition for this fresh order, the petitioner was directed to deposit 50% of the amount confirmed by the order dated 30.08.2024 in cash from their Electronic Cash Register within thirty days. The Court also stipulated that any amount recovered in excess of this 50% pre-deposit would be adjusted. If the petitioner complied with these conditions, the respondent was to pass a final order on merits within three months. The attachment of the petitioner's bank account was to be automatically vacated upon compliance. The Court clarified that the bank attachment would be lifted only if the 50% pre-deposit was made and the petitioner was not in arrears for any other tax period. If the petitioner failed to comply, the respondent was at liberty to proceed with recovery as if the writ petitions were dismissed. The respondent was also directed to provide due notice to the petitioner before passing any fresh order. The issue of whether the amount confirmed by the order dated 17.08.2024 was indeed recovered again was not expressly decided but was implicitly addressed by the direction for a fresh composite order and pre-deposit.

Key Issues

1. Whether the assessment order dated 17.08.2024 and its consequential rectification order dated 12.11.2024, passed under Section 73 of the TNGST Act, 2017, are liable to be quashed as cryptic, duplicative, non-speaking, illegal, arbitrary, and without jurisdiction? 2. Whether the order dated 30.08.2024 and its consequential rectification order dated 30.12.2024, passed under Section 161 of the respective GST enactments, rejecting the petitioner's request for rectification, are liable to be quashed on similar grounds? Petitioner's arguments: The petitioner contended that the demand confirmed in the assessment order dated 17.08.2024 was subsumed in the subsequent order dated 30.08.2024 for the same period. Furthermore, the petitioner alleged that recovery was made from their bank account based on the earlier demand, even after it was purportedly dropped or subsumed. The petitioner sought to quash the orders as illegal and arbitrary and requested fresh assessment orders. Respondent's arguments: The respondent's counsel partly agreed that the demand in the first order was subsumed in the second order. However, the respondent was unable to confirm whether the amount confirmed by the order dated 17.08.2024, which was allegedly dropped due to payments made via the order dated 30.08.2024, was also recovered again.