Facts of the Case

  • The petitioner, Tvl. Hotel Shree Deiva, is a proprietary concern represented by its proprietor, R. Paulpandi, operating in Theni, Tamil Nadu.
  • The respondent revenue authority initiated assessment proceedings against the petitioner for the Assessment Year 2021-22 under GSTIN 33AMXPP9793L3ZO/2021-22.
  • The revenue authority alleged that an examination of information furnished in returns indicated that the petitioner was conducting business operations as an un-registered entity despite meeting the liability criteria to be registered under the Act.
  • The respondent issued an ASMT notice and subsequently a show-cause notice in Form GST DRC-01. However, the department uploaded these notices exclusively to the online GST portal.
  • Because the petitioner did not respond or participate in the online proceedings, the respondent passed an ex-parte assessment order dated December 20, 2025, levying tax, interest, and penalties.
  • Aggrieved by the ex-parte order, the petitioner filed a Writ Petition (W.P(MD)No.14693 of 2026) before the Madurai Bench of the Madras High Court seeking a Writ of Certiorari to quash the impugned order.

Issues Involved

  1. Whether an ex-parte assessment order passed under Section 73 of the TNGST Act 2017 is sustainable when notices are exclusively uploaded to the electronic portal without alternative modes of physical or electronic communication to the dealer.
  2. Whether technical difficulties in accessing the GST portal and communication gaps between tax practitioners and dealers constitute a sufficient basis to grant an opportunity of being heard on equitable grounds.
  3. What conditional thresholds (such as pre-deposit) should be applied when granting a regular opportunity to an assessee to present documentation after failing to utilize prior opportunities.

Petitioner’s Arguments

  • The petitioner contended that they were completely unaware of the generation and issuance of the ASMT and DRC-01 notices because the department exclusively uploaded them to the online portal. No physical copies or direct alternative communications were served to the dealer.
  • It was argued that the petitioner's auditor handles the electronic portal access. The auditor did not track or inform the dealer regarding these specific notices, resulting in a communication breakdown.
  • The petitioner highlighted that dealers frequently experience technical glitches and portal technical errors when attempting to check notices or upload replies directly onto the GST system.
  • Consequently, the petitioner was prevented by sufficient cause from filing a timely reply, and the enforcement of the order without a proper hearing violates principles of natural justice.

Respondent’s Arguments

  • The respondent, represented by the Government Advocate, maintained that the department followed the statutory mechanism provided under the GST framework by hosting the notices on the official portal.
  • The revenue contended that ample opportunities were provided to the taxpayer via the ASMT and DRC-01 notices hosted online.
  • Since the petitioner failed to check the portal, neglected to file any explanation on the merits of the discrepancies, and completely failed to utilize the provided opportunities, the assessing officer had no option but to pass an ex-parte order based on available records. Therefore, the order was procedurally valid under Section 73 of the Act.

Court Order / Findings

  • The Hon'ble Justice D. Bharatha Chakravarthy observed that the assessment was made ex-parte strictly because the petitioner failed to utilize the portal-hosted opportunities.
  • Taking into account the nature of the registration-related discrepancies, the explanations provided for portal accessibility issues, and the practical breakdown of communication between the tax practitioner and the dealer, the Court deemed it fit to extend an opportunity to the assessee on equitable grounds.
  • To balance revenue interests with natural justice, the High Court allowed the Writ Petition on a conditional basis:
    1. The petitioner must deposit 25% of the disputed tax amount with the respondent within four weeks of receiving the web copy of the order, without waiting for a certified copy.
    2. Upon verification of the 25% tax deposit, the impugned assessment order dated December 20, 2025, will be automatically set aside, and the matter will stand remanded back to the respondent assessing officer for a fresh determination.
    3. The petitioner is directed to appear before the assessing officer without fail to submit a detailed reply and supporting verification documents.
    4. Since the assessment order is set aside, any consequential bank account attachments made pursuant to the impugned order stand raised (unfrozen).

Important Clarification

  • Equitable Relief vs. Statutory Negligence: The High Court clarified that while the department fulfills its standard electronic notification protocols by uploading notices to the portal, courts can extend an opportunity to a non-participating assessee on equitable grounds under appropriate conditions, such as directing a partial deposit (25%) of the disputed tax.
  • Bank Account Attachment: If an ex-parte assessment order is set aside and remanded back for fresh consideration, any recovery action or bank attachment initiated under that specific impugned order loses its legal basis and must be lifted immediately.

Section Involved

  • Section 73 of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful misstatement or suppression of facts).
  • Article 226 of the Constitution of India (Writ of Certiorari praying to quash the impugned assessment order).

Link to download the order - https://mytaxexpert.co.in/uploads/1783062780_343compressed.pdf

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