Facts of the Case

  • The petitioner, Tvl. Bagavathiamman Magalir Sangam, represented by its Secretary K. Rajammal, is located in Dindigul, Tamil Nadu.
  • The respondent, the State Tax Officer, Vedasandur Assessment Circle, initiated assessment proceedings against the petitioner for the Assessment Year 2022-2023.
  • The respondent department issued an ASMT notice and a subsequent show-cause notice in Form GST DRC-01. The department alleged that upon examination of the information furnished in the returns, the petitioner was conducting business operations as an unregistered person despite being statutory liable to register under the provisions of the GST Act.
  • Because the petitioner did not submit any response or file a reply to the notices uploaded by the department, the respondent proceeded to pass an ex-parte assessment order under Reference No. ZD331225381260R dated 24.12.2025.
  • Through the impugned order, the respondent levied tax liabilities, applicable interest, and consequential penalties on the petitioner. Aggrieved by this ex-parte order and the subsequent attachment of their bank account, the petitioner approached the Madurai Bench of the Madras High Court via a Writ Petition.

Issues Involved

  • Whether the impugned ex-parte assessment order passed under Section 73 of the TNGST Act, 2017 violates the principles of natural justice due to the non-receipt or lack of awareness of the portal-exclusive notifications by the assessee.
  • Whether the technical challenges encountered on the GST portal and the omission of separate physical or direct communication modes by the tax department constitute sufficient grounds to set aside an assessment order and remand the matter back for a fresh hearing.
  • Whether it is equitable to grant the petitioner a fresh opportunity to produce supporting documents and submit their response subject to specific financial conditions.

Petitioner’s Arguments

  • The petitioner contended that all notices, including the ASMT notice and Form GST DRC-01, were uploaded solely on the online GST portal by the respondent department.
  • It was submitted that the petitioner’s appointed auditor managed the online GST portal operations, and these vital notices were never directly communicated or served to the petitioner via any alternative mode of delivery. Consequently, the petitioner remained completely unaware of the ongoing proceedings and could not file a timely reply.
  • The petitioner highlighted systemic difficulties faced by small dealers and assessees in independently monitoring the online portal. They further argued that even when attempts were made to upload replies directly, technical portal glitches frequently prevented successful electronic submissions.
  • Therefore, the petitioner prayed for the impugned order to be quashed, requesting a fair and reasonable opportunity to present their books of accounts and explanations on merits before the assessing officer.

Respondent’s Arguments

  • The respondent, represented by the Government Standing Counsel, supported the validity of the impugned assessment order dated 24.12.2025.
  • It was argued that the tax department had strictly followed the prescribed statutory procedure by duly uploading the notices on the official GST portal.
  • The revenue contended that the petitioner failed to utilize the multiple opportunities provided during the assessment proceedings. Since no explanation or contrary evidence was filed by the dealer on the portal, the assessing officer was legally justified in passing the ex-parte order based on the information available on record.

Court Order / Findings

  • The Hon'ble Judge D. Bharatha Chakravarthy reviewed the nature of the discrepancies, the explanation tendered by the assessee, and the reasons brought forward for not availing themselves of the initial opportunities.
  • The Court observed that it has consistently extended opportunities to assessees on equitable grounds, provided appropriate safeguarding conditions are met. It determined that the petitioner deserves a fresh opportunity to submit a comprehensive reply and produce relevant supporting documents before the assessing authority.
  • Accordingly, the High Court allowed the Writ Petition on the following strict terms:
    1. The petitioner must deposit 25% of the disputed tax amount with the respondent within four weeks from the receipt of the web copy of the order, without waiting for a certified hard copy.
    2. Promptly upon the verification of such deposit, the impugned assessment order dated 24.12.2025 shall stand set aside, and the entire matter shall stand remanded back to the file of the respondent assessing officer for de novo consideration.
    3. The assessee is directed to appear before the respondent without fail to submit their reply and supporting evidence, which the respondent must evaluate freshly in accordance with the law.
    4. Consequent to the setting aside of the impugned assessment order, any active attachment placed on the petitioner’s bank account pursuant to the order shall stand raised immediately.
    5. The petition was disposed of with no order as to costs, and all connected miscellaneous petitions were formally closed.

Important Clarification

  • Equitable Relief vs. Portal Reliance: The judgment reinforces a critical legal precedent that while online portal uploads satisfy technical service requirements, absolute reliance on portal-only notifications without considering real-world communication breakdowns or technical glitches can violate the principles of natural justice.
  • Conditional Remand Standard: The High Court clarified that relief on equitable grounds is not absolute; it is subject to balancing the interests of the revenue by ordering a pre-deposit (25% in this case) before restarting the assessment process.
  • Lifting of Bank Attachments: The ruling confirms that once an underlying ex-parte assessment order is judicially set aside, any consequential recovery actions—such as bank account attachments—lose their legal basis and must be discharged immediately.

Section Involved

  • Primary Section: Section 73 of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017 / Central Goods and Services Tax (CGST) Act, 2017 (dealing with the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful-misstatement or suppression of facts).
  • Constitutional Provision: Article 226 of the Constitution of India (pertaining to the power of High Courts to issue certain writs, specifically a Writ of Certiorari in this matter).

Link to download the order - https://mytaxexpert.co.in/uploads/1783057837_305compressed.pdf

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