Facts of the Case

The petitioner, Tvl. Sivasakthi Amman, represented by its proprietor T. Sermathurai, approached the Madurai Bench of the Madras High Court under Article 226 of the Constitution of India.

The petitioner challenged the assessment order dated 23.12.2025 relating to Tax Period 2021-22.

The petitioner sought a Writ of Certiorarified Mandamus to:

  • call for the records pertaining to the impugned proceedings;
  • quash the assessment order as illegal;
  • quash it as being without jurisdiction;
  • quash it for gross violation of the principles of natural justice; and
  • direct the respondent to redo the assessment afresh after providing an opportunity of personal hearing under the GST Act, 2017.

The impugned order was expressly passed under Section 73 of the TNGST Act, 2017.

The assessment was completed ex parte because the petitioner did not utilise the opportunities provided during the assessment proceedings.

The sole discrepancy/ground identified in the judgment was:

Non-submission of supporting documents for the claim of exemption.

The three-column table on page 3 of the judgment is especially important because it records:

  • the precise discrepancy;
  • the assessee’s explanation on merits; and
  • the explanation for not availing the earlier opportunity.

According to that table, the petitioner asserted that it was dealing only with exempted outward supply of pepper, claimed exemption under Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017, had filed monthly returns claiming the exemption through the GSTN Common Portal, and was ready to submit connected records supporting the exemption claim.

Issues Involved

The principal issues involved were:

  1. Whether the ex parte assessment order dated 23.12.2025 passed under Section 73 of the TNGST Act, 2017 could be sustained without considering supporting documents relating to the petitioner’s exemption claim.
  2. Whether the petitioner’s outward supply of pepper was covered by the GST exemption claimed under Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017.
  3. Whether the petitioner had correctly claimed exemption through monthly GST returns filed on the GSTN Common Portal.
  4. Whether non-submission of supporting documents during the original proceedings justified sustaining the ex parte assessment without granting another opportunity.
  5. Whether the petitioner should be allowed to file a detailed reply and connected records supporting its exemption claim.
  6. Whether the petitioner’s explanation that the portal-uploaded order was not known to it and that the accountant had failed to inform it justified a fresh opportunity.
  7. Whether the Court’s usual condition requiring deposit of 25% of the disputed tax amount should be imposed where the petitioner pleaded that it was dealing in pepper as an exempted item.
  8. Whether any bank account attachment made pursuant to the impugned assessment should continue after the assessment order was set aside.

Petitioner’s Arguments

The petitioner’s principal argument was that it dealt with:

exempted outward supply of pepper only.

The petitioner specifically contended that pepper was fully exempted from GST under:

Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017.

The petitioner further submitted that:

  • it had filed monthly returns;
  • exemption had been claimed through the GSTN Common Portal;
  • the outward supply concerned pepper;
  • the supply was claimed as exempt from GST; and
  • the petitioner was ready to file a reply together with connected records supporting the exemption claim.

Thus, the petitioner’s case was that the assessment arose because supporting documents had not been submitted, but the substantive exemption claim could be demonstrated through a fresh reply and documentary evidence.

Reason for Non-Participation

The petitioner explained that:

  • the impugned order had been uploaded on the GST Portal without its knowledge; and
  • the accountant had not informed the petitioner about the impugned order.

The petitioner therefore requested a fresh opportunity to produce the relevant documents and establish the exemption claim.

These contentions are expressly recorded in the page 3 table of the judgment.

Respondent’s Arguments

The respondent was represented by the learned Government Standing Counsel.

The judgment records that the High Court heard:

  • learned counsel for the petitioner; and
  • learned Government Standing Counsel for the respondent.

However, the six-page order does not separately reproduce any detailed independent counter-submissions made by the respondent concerning:

  • the petitioner’s pepper transactions;
  • the applicability of Notification No. 2/2017-Central Tax (Rate);
  • the monthly returns allegedly filed by the petitioner;
  • the exemption claim made through the GSTN Common Portal;
  • the supporting records proposed to be filed; or
  • the petitioner’s explanation concerning the accountant.

Therefore, to preserve the exact meaning of the judicial record, no additional departmental argument should be attributed to the respondent beyond what the order expressly records.

Court Order / Findings

The Madras High Court considered:

  • the nature of the exemption claim;
  • the explanation provided by the assessee; and
  • the reason given before the Court for not availing the earlier opportunity.

The Court held that an opportunity could be granted to the assessee to:

  • present its submissions; and
  • produce relevant supporting documents before the respondent assessing officer.

The Court observed that it had been extending such opportunities on equitable grounds, though under appropriate conditions.

Significant Finding: Usual 25% Deposit Condition Not Imposed

The most important feature of the judgment appears on page 4.

The High Court expressly observed that:

Normally, this Court imposes a condition to deposit 25% of the disputed tax amount.

However, the Court further held that in the present case:

  • the petitioner pleaded that it was dealing with pepper; and
  • pepper was pleaded to be an exempted item.

For that reason, the Court expressly held that the usual 25% disputed-tax deposit condition would not be imposed.

Accordingly, the writ petition was allowed on the following terms:

  • the impugned order dated 23.12.2025 shall stand set aside;
  • the matter shall stand remanded back to the respondent;
  • within four weeks from receipt of a web copy of the order, the assessee shall appear before the respondent without fail;
  • the assessee shall submit its reply and documents in support of its claim;
  • the respondent shall consider the matter afresh and pass orders in accordance with law;
  • the petitioner need not wait for a certified copy of the order;
  • since the impugned assessment order was set aside, any attachment of the bank account made pursuant to the impugned order shall stand raised;
  • no costs were awarded; and
  • the connected miscellaneous petition was closed.

The detailed operative directions appear on page 4, with formal closure recorded on page 5 of the judgment.

Important Clarification

This judgment does not finally adjudicate that every supply of pepper is automatically exempt from GST in every factual situation.

It also does not conclusively determine that:

  • every product described commercially as pepper necessarily falls within the exact exemption entry;
  • the petitioner had already established all factual conditions for exemption;
  • all disputed outward supplies were conclusively exempt;
  • the petitioner’s monthly returns were substantively correct in every respect; or
  • no tax liability could arise after fresh verification.

The statement that the petitioner was dealing only in exempted outward supply of pepper and that pepper was fully exempt under Notification No. 2/2017-Central Tax (Rate) was the petitioner’s explanation on merits, as recorded in the judgment.

The High Court’s operative conclusion was narrower:

  • the nature of the exemption claim justified a fresh opportunity;
  • the petitioner should be allowed to produce supporting documents;
  • the assessing authority must reconsider the matter afresh in accordance with law; and
  • because the petitioner pleaded that it was dealing in pepper as an exempted item, the Court did not impose the usual 25% deposit condition.

A further important clarification is that the Court did not hold that failure of an accountant to inform the taxpayer automatically invalidates a GST assessment. That explanation was considered along with:

  • the nature of the exemption claim;
  • the proposed supporting records; and
  • the equitable basis for granting another opportunity.

Sections / Legal Provisions Involved

Section 73 of the TNGST Act, 2017:
The impugned assessment order dated 23.12.2025 was expressly passed under this provision.

Article 226 of the Constitution of India:
The petitioner invoked the writ jurisdiction of the High Court seeking a Writ of Certiorarified Mandamus.

Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017:
The petitioner expressly relied upon this exemption notification and contended that the outward supply of pepper was fully exempt from GST.

GST Act, 2017 – Personal Hearing and Fresh Assessment Context:
The petitioner sought a direction for reassessment after an opportunity of personal hearing under the GST framework.

Important Statutory Accuracy Note

The six-page judgment does not expressly identify any additional specific GST section number governing the exemption claim itself beyond:

  • Section 73 of the TNGST Act; and
  • the specific exemption notification relied upon by the petitioner.

Accordingly, no unmentioned statutory provision should be presented as having been expressly cited or adjudicated by the Court.

Link to download the order -

https://mytaxexpert.co.in/uploads/1783062309_367compressed.pdf 

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