Facts of the Case

The petitioner, Tvl. Hotel Shree Deiva, represented by its Proprietor, R. Paulpandi, filed a writ petition under Article 226 of the Constitution of India challenging the assessment order dated 20.12.2025 passed by the Deputy State Tax Officer–2, Theni-1 Assessment Circle. The impugned assessment order related to Assessment Year 2021–22 and was passed under Section 73 of the TNGST Act, 2017.

The assessment was made ex parte because, according to the order, the petitioner had not utilised the opportunities provided during the assessment proceedings. The discrepancy underlying the proceedings concerned the allegation, arising from examination of return information, that the petitioner had conducted business as an unregistered person despite allegedly being liable for registration under the Act, and that no reply had been filed.

The petitioner’s case was that notices, including DRC-01 and ASMT notice, had been uploaded only on the online GST portal. According to the petitioner, the auditor was handling the GST portal and the notices were not communicated to the petitioner. Consequently, the petitioner claimed that it remained unaware of the proceedings and was unable to submit a reply before the impugned assessment order was passed. The order ultimately levied tax, interest and penalty. The detailed three-column table appearing on page 3 of the judgment records the discrepancy, the assessee’s explanation on merits, and the explanation for failure to avail the opportunity.

Issues Involved

The principal issues before the High Court were:

  1. Whether the ex parte assessment order dated 20.12.2025 passed under Section 73 of the TNGST Act, 2017 should be interfered with where the petitioner claimed that statutory notices were uploaded only on the GST portal and were not brought to its knowledge.
  2. Whether, considering the nature of the discrepancy, the assessee’s explanation and the reasons for non-participation in the assessment proceedings, a fresh opportunity should be granted to submit a reply and supporting documents.
  3. Whether such opportunity could appropriately be granted on equitable terms, including a condition requiring deposit of a portion of the disputed tax.
  4. What consequence should follow in respect of any bank account attachment made pursuant to the impugned assessment order.

Petitioner’s Arguments

The petitioner contended that the respondent had issued DRC-01 and ASMT notices, but the notices were uploaded only on the online GST portal. The petitioner stated that the GST portal was being handled by its auditor and that the notices were never communicated to it. Therefore, the petitioner was allegedly unaware of the notices and could not submit a reply.

It was further explained that dealers often depend upon auditors and tax practitioners for access to the GST portal and, where such notices are not communicated, the dealer may remain unaware of the proceedings. The petitioner also referred to difficulties in accessing portal notices and technical problems that may arise while uploading replies. According to the petitioner, notices were not sent through any other mode and the respondent proceeded to pass the impugned order dated 20.12.2025 for Assessment Year 2021–22 without the petitioner’s effective participation.

On this basis, the petitioner sought quashing of the assessment order and a fresh opportunity to place its reply and supporting documents before the assessing authority.

Respondent’s Arguments

The respondent Revenue was represented by the learned Government Advocate. The assessment order had been passed ex parte on the basis that the petitioner failed to utilise the opportunities provided and did not file a reply to the notices issued in the proceedings.

The Revenue’s position, as reflected in the impugned proceedings, was that the assessment action arose from the identified discrepancy concerning the petitioner allegedly conducting business as an unregistered person despite being liable for registration, and that no reply had been submitted by the petitioner. The High Court heard the learned Government Advocate representing the Revenue before determining whether another opportunity should be granted.

Court Order / Findings

The Madras High Court considered:

  • the nature of the discrepancies noted;
  • the explanation provided by the assessee;
  • the reasons advanced for not availing the earlier opportunity; and
  • the need to permit the assessee to produce relevant supporting documents before the assessing officer.

The Court found that an opportunity could be granted to the petitioner to present its submissions and produce supporting documents before the respondent assessing officer. The Court specifically observed that such opportunities had been extended on equitable grounds, but under appropriate conditions. Accordingly, the fresh opportunity was made conditional upon deposit of 25% of the disputed tax amount.

The writ petition was therefore allowed on the following terms:

  1. 25% Deposit within Four Weeks: The petitioner was directed to deposit 25% of the disputed tax amount with the respondent within four weeks from receipt of the web copy of the High Court’s order, without waiting for a certified copy.
  2. Impugned Order to Stand Set Aside upon Deposit: Upon such deposit, the assessment order dated 20.12.2025 would stand set aside and the matter would stand remanded to the respondent.
  3. Fresh Reply and Supporting Documents: The assessee was directed to appear before the respondent without fail and submit its reply and documents supporting its claim.
  4. Fresh Adjudication: The respondent was directed to reconsider the matter afresh and pass orders in accordance with law.
  5. Bank Account Attachment Raised: Since the impugned assessment order was set aside, any attachment of the bank account made pursuant to that order would stand raised.
  6. No Costs: No order as to costs was made, and the connected miscellaneous petitions were closed.

Important Clarification

The judgment should be understood as granting a conditional opportunity for fresh adjudication, rather than as a final determination of the underlying GST liability on merits. The High Court did not conclusively adjudicate whether the alleged liability arising from conducting business as an unregistered person was factually or legally established. Instead, considering the discrepancy, the assessee’s explanation and the reasons for non-participation, the Court enabled the assessee to place its reply and supporting documents before the assessing authority.

A particularly important aspect is that the impugned order does not stand set aside unconditionally. The operative direction states that the petitioner must first deposit 25% of the disputed tax amount within four weeks of receiving the web copy, and upon such deposit, the impugned order dated 20.12.2025 shall stand set aside and the matter shall be remanded.

Further, the Court expressly directed that any bank account attachment made pursuant to the impugned assessment order would stand raised because the assessment order was being set aside in terms of the Court’s directions.

Sections / Legal Provisions Involved

Section 73 of the TNGST Act, 2017 — The impugned assessment order dated 20.12.2025 was passed under this provision.

Article 226 of the Constitution of India — The writ petition was instituted invoking the High Court’s writ jurisdiction and sought issuance of a Writ of Certiorari to quash the impugned assessment order.

GST DRC-01 Proceedings — Referred to in the petitioner’s explanation concerning notices allegedly uploaded on the GST portal.

ASMT Notice — Also referred to in the petitioner’s explanation regarding portal-based notices and the alleged lack of actual awareness.


Link to download the order -https://www.mytaxexpert.co.in/uploads/1783065532_403.pdf

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