Tvl. Fancy Agency vs. The Deputy State Tax Officer - 1

Facts

The petitioner, Tvl. Fancy Agency, challenged an ex parte assessment order dated 09.04.2025 passed by the Deputy State Tax Officer – 1, Virudhunagar, for the assessment year 2022-23 under Section 74 of the TNGST Act, 2017. The petitioner contended that they failed to file a reply to the Show Cause Notice (SCN) in Form GST DRC-01 dated 26.11.2024 because the respondent simultaneously uploaded six notices for six different assessment years on the web portal without issuing physical copies, causing confusion. The petitioner sought to quash the order and requested a fresh assessment under Section 73 of the TNGST Act after a personal hearing. The petitioner offered to deposit 25% of the balance tax, having already paid 50%. The respondent agreed to set aside the order and remit the matter if the petitioner paid 25% of the disputed tax.

Held

The Court held that the impugned order was an ex parte order and that the petitioner should not be put to irreparable hardship. The Court noted that the respondent ought to have issued notice through Registered Post with Acknowledgement Due (RPAD) as an alternative mode of service if no reply was received to the web portal notice, as contemplated under Section 169 of the TNGST Act. Since no such alternative mode of service was adopted, the Court found it appropriate to afford the petitioner an opportunity to participate in the proceedings. Consequently, the impugned order was set aside, subject to the petitioner depositing 25% of the remaining amount within three weeks. The matter was remitted back to the respondent for passing a fresh order after the petitioner files a reply to the SCN and is afforded a sufficient opportunity of personal hearing. The Court did not decide on the applicability of Section 73 versus Section 74 of the TNGST Act.

Key Issues

1. Whether the ex parte assessment order passed by the respondent under Section 74 of the TNGST Act, 2017, is liable to be quashed due to non-compliance with principles of natural justice and proper service of notice, particularly in light of the petitioner's explanation for non-response to the Show Cause Notice? Petitioner's arguments: The petitioner argued that the impugned order was passed ex parte due to confusion caused by the respondent simultaneously uploading six notices for six assessment years on the web portal without issuing physical copies, leading to a failure to notice and respond to the SCN. They contended that this resulted in irreparable hardship and that a fresh assessment under Section 73 of the TNGST Act, with a proper opportunity of personal hearing, was necessary. They also offered to deposit 25% of the balance tax. Respondent's arguments: The respondent agreed to set aside the impugned order and remit the matter back for fresh consideration if the petitioner undertook to pay 25% of the disputed tax.