Tvl Asian Enterprises vs. The Deputy State Tax Officer-1

Held

The Court held that the petitioner had made out a case for interference, considering the total value of supply was Rs.25,94,000/- for the tax period 2020-21. The Court noted that the reply dated 31.01.2025 contained a grammatical mistake, leading to the demand of tax at 12% instead of 1% under Section 10 of the respective GST enactment read with Rule 6 of the respective GST Rules. Consequently, the Court quashed the impugned order and remitted the case back to the respondent for fresh assessment. The quashed order was to be treated as an addendum to the show cause notice. The petitioner was directed to file a reply to the show cause notice within 30 days and pay the admitted tax under Section 10 as a pre-condition. The respondent was directed to pass a fresh order within three months thereafter, after hearing the petitioner. The Court also stipulated that failure to comply with these directions would result in the dismissal of the writ petition, allowing the respondent to proceed as per law. The petitioner was also directed to cooperate and produce documents to substantiate the supply value.

Facts

The petitioner, Tvl. Asian Enterprises, represented by its Proprietor Mohammed Fagurudeen Khan, filed a writ petition challenging an assessment order dated 10.02.2025 passed by the respondent, The Deputy State Tax Officer-1, for the tax period 2020-21. The impugned order followed a notice in DRC 01 dated 22.11.2024, to which the petitioner had replied and attended a personal hearing. The petitioner's case is that the total value of supply was Rs.25,94,000/-, and they were eligible for the composition scheme under Section 10 of the GST enactment, paying tax at 1%. The petitioner contended that a grammatical mistake in their reply led to the demand of tax at 12% instead of 1%.

Key Issues

1. Whether the assessment order dated 10.02.2025, passed by the respondent for the tax period 2020-21, is liable to be quashed due to a factual error in the petitioner's reply leading to an incorrect tax demand, contrary to the provisions of Section 10 of the respective GST enactment and Rule 6 of the respective GST Rules? Petitioner's Arguments: The petitioner argued that the total value of supply for the period 2020-21 was Rs.25,94,000/- and they were eligible for the composition scheme under Section 10 of the GST enactment, requiring tax payment at 1%. They contended that a grammatical mistake in their reply, where they stated 'we are collected taxes on our outward supply' instead of 'we have not collected taxes on our outward supply', was misinterpreted by the respondent. This error resulted in the tax being demanded at 12% instead of the applicable 1% under the composition scheme. They relied on Section 10 of the respective GST enactment and Rule 6 of the respective GST Rules. Respondent's Arguments: The respondent did not record any specific arguments against the petitioner's contentions in the judgment.