Facts of the Case

  • Petitioner Status: The petitioner, Tvl. Bagavathiamman Magalir Sangam, is a women's collective group represented by its Secretary, K. Rajammal, based in Dindigul, Tamil Nadu.
  • Impugned Order: The respondent, the State Tax Officer of Vedasandur Assessment Circle, passed an ex-parte assessment order under Reference No. ZD331225381123R dated 24.12.2025 for the Assessment Year (AY) 2021-2022.
  • Allegations by Revenue: During the scrutiny and examination of information furnished in the tax returns, the respondent alleged that the petitioner was conducting business operations as an unregistered entity despite crossing the statutory threshold making them liable to take registration under the Act.
  • Communication Gaps: The respondent department uploaded the show-cause notices (Form GST DRC-01) and assessment notices (Form GST ASMT) exclusively on the online GST portal. The petitioner's tax consultants/auditors failed to notice or check the portal dashboard and did not communicate the existence of these notices to the petitioner. Furthermore, no physical copies or alternative modes of communication were utilized by the respondent to serve the notices.
  • Consequence: Consequently, due to absolute lack of awareness regarding the pending notices, the petitioner failed to file any reply or participate in the personal hearing, leading the respondent to pass a unilateral best-judgment ex-parte order levying tax, interest, and heavy penalties.

Issues Involved

  • Whether an ex-parte assessment order passed under Section 73 of the TNGST/CGST Act 2017 violates the principles of natural justice when notices are strictly uploaded on the portal dashboard without any physical service or alternative intimation to the assessee.
  • Whether technical portal glitches and communication breakdowns between tax practitioners and taxpayers constitute sufficient cause to grant an equitable opportunity for fresh adjudication.
  • Whether the High Court can exercise its writ jurisdiction under Article 226 of the Constitution of India to conditionally restore an assessment matter back to the assessing officer for fresh consideration on merits.

Petitioner’s Arguments

  • Violation of Natural Justice: The petitioner strongly contended that they were completely unaware of the ongoing assessment proceedings as the respondent never served the notices through any physical or alternative modes of service.
  • Portal Accessibility and Technical Glitches: It was argued that navigating the online GST portal poses significant practical challenges for small dealers. Even when attempts were made by taxpayers to log in or upload standard responses, severe technical glitches on the GST portal frequently prevented successful document submission.
  • Professional Communication Breakdown: The petitioner submitted that their tax practitioners/auditors who managed their GST compliance dashboard did not actively track or verify the portal notices and failed to keep the dealer informed, resulting in an inadvertent non-compliance rather than deliberate tax evasion.

Respondent’s Arguments

  • Proper Service via Portal: The Government Standing Counsel representing the revenue argued that the department followed the standard operating procedure by uploading all statutory notices, including DRC-01 and ASMT forms, directly onto the official GST portal.
  • Failure to Utilize Opportunities: The respondent emphasized that multiple dynamic opportunities were granted to the taxpayer to explain the discrepancies regarding their unregistered business operations. The dealer failed to respond or utilize the system-generated opportunities, making an ex-parte assessment legally sound under the Act.

Court Order & Findings

  • Principles of Equity and Fairness: The Hon'ble Justice D. Bharatha Chakravarthy observed that taking into consideration the specific nature of the discrepancies, the technical limitations highlighted by the assessee, and the reasons for non-participation, it is fit to extend an opportunity to the taxpayer on equitable grounds.
  • Conditional Remand: The Madras High Court allowed the Writ Petition and set aside the impugned assessment order dated 24.12.2025, remanding the matter back to the file of the State Tax Officer, subject to a strict pre-deposit condition.
  • Pre-deposit Directive: The petitioner was directed to deposit 25% of the disputed tax amount with the respondent department within four weeks from the date of receipt of the web copy of the order, without waiting for the certified copy.
  • Restoration of Proceedings: Upon compliance with the 25% tax deposit, the assessment proceedings will stand revived. The petitioner must appear before the assessing officer without fail, submit a detailed reply along with supporting documents, and the respondent must pass a fresh order in accordance with law.
  • Lifting of Bank Attachment: Crucially, the Court ordered that since the impugned assessment order has been set aside, any consequential recovery actions, including the attachment of the petitioner's bank accounts, shall stand raised immediately.

Important Clarification

This ruling clarifies that while electronic service via the GST portal dashboard is a recognized legal mode of service under the GST regime, the High Courts will continue to invoke their extraordinary writ jurisdiction under Article 226 to protect taxpayers from harsh ex-parte liabilities arising out of genuine portal ignorance or technical issues. However, this relief is not unconditional; taxpayers seeking to reopen automated ex-parte assessments must show bona fide intent by depositing a reasonable portion (25% in this case) of the disputed tax to secure a fresh hearing on merits.

Sections Involved

  • Section 73 of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017 / Central Goods and Services Tax (CGST) Act, 2017 (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).
  • Article 226 of the Constitution of India (Power of High Courts to issue certain writs).

Link to download the order - https://mytaxexpert.co.in/uploads/1783059341_315compressed.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.