Tvl.Kms Traders vs. The State Tax Officer

Facts

The petitioner, Tvl.KMS Traders, represented by its Proprietor Muthiahasari Murugan, filed a writ petition before the Madurai Bench of the Madras High Court challenging an Assessment Order dated 06.05.2026, passed by the State Tax Officer, Ambasamudram Assessment Circle. This order confirmed a proposal in a Show Cause Notice dated 01.12.2024 for the tax period 2022-23, in the absence of a reply from the petitioner. The petitioner filed the writ petition on 30.09.2026, after the limitation period for filing an appeal under Section 107 of the GST enactments had expired. The petitioner agreed to pre-deposit 10% of the disputed tax demand as a condition for de novo adjudication.

Held

The Court held that the impugned Assessment Order dated 06.05.2026 was liable to be quashed due to a violation of the Principles of Natural Justice, as the petitioner was not afforded an opportunity of a personal hearing. The Court acknowledged that the writ petition was filed beyond the statutory limitation period for appeal under Section 107 of the GST enactments. However, in view of the petitioner's willingness to pre-deposit 10% of the disputed tax demand, the Court decided to entertain the writ petition. The Court quashed the impugned order and remitted the case back to the first respondent for de novo adjudication, subject to the petitioner depositing 10% of the disputed tax in cash within thirty days of receiving the order. The petitioner was also directed to file a reply to the Show Cause Notice dated 01.12.2024 within the same period. The first respondent was directed to pass a fresh order on merits within three months of receiving the reply and pre-deposit, and the attachment of the petitioner's bank account would be automatically vacated upon compliance. The Court made it clear that if the petitioner failed to comply with these stipulations, the respondents could proceed to recover the tax as if the writ petition was dismissed in limine.

Key Issues

1. Whether the impugned Assessment Order dated 06.05.2026, passed by the State Tax Officer, is liable to be quashed for gross violation of the Principles of Natural Justice, specifically for not providing an opportunity of personal hearing, as contended by the petitioner? 2. Whether the Court should entertain the writ petition despite the expiry of the statutory limitation period for filing an appeal under Section 107 of the GST enactments, given the petitioner's willingness to pre-deposit 10% of the disputed tax demand? Petitioner's Contention: The petitioner argued that the assessment order was passed in gross violation of the Principles of Natural Justice as no personal hearing was granted. They also agreed to pre-deposit 10% of the disputed tax demand to facilitate a fresh adjudication. Revenue's Contention: The judgment records no specific argument from the revenue or State regarding the violation of natural justice or the entertainment of the writ petition beyond the limitation period. The Government Advocate (Taxes) took notice for the respondent.