Facts of the Case

The petitioner, Tvl. Jothi Modern Rice Mill, challenged an assessment order dated 16 December 2025 passed by the respondent under Section 73 of the TNGST Act, 2017. The writ petition was filed under Article 226 of the Constitution of India, seeking quashing of the impugned assessment order on the ground that it was illegal and in gross violation of the principles of natural justice.

The assessment was completed ex parte because the petitioner had not utilised the opportunities provided during the assessment proceedings.

The principal discrepancy recorded against the petitioner was the non-submission of supporting documents for the claim of exemption.

The petitioner’s case on merits was that it was dealing in unbranded rice and that the supply of such unbranded rice was exempt from GST under Serial No. 70 and HSN Code 1006 of Notification No. 02/2017-Central Tax (Rate) dated 28 June 2017. Accordingly, the petitioner contended that the levy of tax was incorrect and invalid.

The petitioner also expressed readiness to file a reply along with the connected records before the respondent in support of its exemption claim.

As regards the failure to avail the earlier opportunity, the petitioner explained that its Accountant had not informed it about the impugned order, which had been uploaded on the GST portal without the petitioner’s knowledge. The judgment’s table on page 3 specifically records the discrepancy, the assessee’s exemption explanation, and the reason advanced for not availing the opportunity.

Issues Involved

The principal issues before the High Court were:

  1. Whether the ex parte assessment order passed under Section 73 of the TNGST Act, 2017 should be sustained when the petitioner sought an opportunity to substantiate its exemption claim by producing relevant supporting documents.
  2. Whether the petitioner’s claim that it dealt only in unbranded rice allegedly exempt under Serial No. 70, HSN Code 1006 of Notification No. 02/2017-Central Tax (Rate) dated 28 June 2017 warranted fresh consideration by the Assessing Officer.
  3. Whether, considering the nature of the exemption claim and the explanation for not availing the earlier opportunity, the petitioner should be granted another opportunity on equitable grounds.
  4. Whether the usual condition requiring a 25% deposit should be imposed while setting aside the assessment and remanding the matter.
  5. Whether any bank account attachment made pursuant to the impugned assessment order should continue after the assessment order itself was set aside.

Petitioner’s Arguments

The petitioner contended that:

  • It was dealing in unbranded rice.
  • The supply of unbranded rice was claimed to be exempt from GST under Serial No. 70 and HSN Code 1006 of Notification No. 02/2017-Central Tax (Rate) dated 28 June 2017.
  • Consequently, the levy of tax under the impugned assessment order was incorrect and invalid.
  • The petitioner was ready to submit a detailed reply together with the relevant records and supporting documents before the respondent to establish its exemption claim.
  • The earlier opportunity could not be effectively availed because the Accountant had not informed the petitioner about the impugned order uploaded on the GST portal.
  • The petitioner therefore sought a fresh opportunity to place its submissions and supporting records before the Assessing Officer.

Respondent’s Arguments

The respondent Revenue was represented by the learned Additional Government Pleader.

The order records that the assessment had been made ex parte because the petitioner did not utilise the opportunities provided. Thus, the Revenue’s position, as emerging from the assessment proceedings recorded by the Court, was that the petitioner had failed to submit the necessary supporting documents for its exemption claim and had not availed the opportunities available during the proceedings.

The judgment does not record any elaborate separate substantive argument by the respondent beyond the above position. Therefore, no additional contention should be attributed to the Revenue beyond what is expressly reflected in the order.

Court’s Findings

The Madras High Court considered:

  • the nature of the exemption claim raised by the petitioner;
  • the petitioner’s explanation on the merits of the dispute;
  • the reason furnished for not availing the earlier opportunity; and
  • the petitioner’s willingness to submit the relevant supporting documents before the Assessing Officer.

The Court found that an opportunity could be granted to the assessee to present its submissions and produce the relevant supporting documents before the respondent Assessing Officer.

The Court specifically observed that it had been extending such opportunities on equitable grounds, and accordingly granted an opportunity to the petitioner assessee.

A particularly important finding was that, since it was stated that the petitioner was dealing only with unbranded rice claimed to be exempt from tax, the Court did not impose the usual condition of depositing 25%.

Court Order / Final Directions

The High Court allowed the writ petition on the following terms:

  1. The impugned assessment order dated 16 December 2025 was set aside.
  2. The matter was remanded back to the respondent for fresh consideration.
  3. The assessee was directed to appear before the respondent without fail and submit its reply and documents supporting its claim.
  4. The respondent was directed to consider the matter afresh and pass orders in accordance with law.
  5. Since the impugned assessment order was set aside, any attachment of the bank account made pursuant to the impugned order was directed to stand raised.
  6. The authority was directed to act upon the web copy of the High Court’s order without waiting for a certified copy.
  7. No order as to costs was made, and the connected miscellaneous petition was closed.

These operative directions appear in paragraph 6 of the judgment.

Important Clarification

This judgment is significant for several specific reasons:

  • The High Court did not finally adjudicate the exemption claim on merits. It granted the petitioner an opportunity to establish the claim before the Assessing Officer through a reply and supporting documents.
  • The order should therefore not be read as a final judicial declaration that every supply of unbranded rice is automatically exempt in all factual circumstances. The exemption claim remains subject to fresh consideration in accordance with law and the supporting material produced by the assessee.
  • The Court’s decision to waive the usual 25% deposit condition was linked to the specific statement that the petitioner dealt only in unbranded rice claimed to be exempt from tax.
  • The judgment expressly records the grant of a fresh opportunity on equitable grounds, considering the nature of the claim, the explanation on merits, and the reason given for failure to avail the earlier opportunity.
  • The lifting of the bank attachment followed from the setting aside of the underlying assessment order.
  • The direction to act on the web copy without waiting for a certified copy provides immediate practical effect to the relief granted.

Sections / Legal Provisions Involved

·         Section 73 of the TNGST Act, 2017 – The impugned assessment order was 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 Certiorari to quash the impugned assessment order.

·         Notification No. 02/2017-Central Tax (Rate) dated 28 June 2017 – The petitioner relied upon Serial No. 70 and HSN Code 1006 in support of its claim that the supply of unbranded rice was exempt from GST.

·         Principles of Natural Justice – The petitioner challenged the ex parte assessment and sought a meaningful opportunity to submit its reply and supporting documents.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1783505501_1481compressed.pdf

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