Facts of the Case

The petitioner, Tvl. Rukmani Stores, challenged an assessment order dated 12.12.2025 passed under Section 73 of the TNGST Act, 2017 for the assessment year 2021-22. The assessment was completed ex parte as the petitioner failed to respond to notices issued during the assessment proceedings.

The dispute arose because the department disallowed the exemption claimed on the outward supply of Karuppatti (Palm Jaggery) by treating the entire reported exempt turnover as taxable turnover. The petitioner approached the Madras High Court seeking quashing of the assessment order and a direction for fresh adjudication after granting an opportunity of personal hearing.

Issues Involved

  1. Whether the ex parte assessment order passed under Section 73 of the TNGST Act without considering the petitioner's explanation was sustainable.
  2. Whether the exemption claimed on the sale of Karuppatti (Palm Jaggery) required fresh examination.
  3. Whether the petitioner deserved another opportunity to produce supporting documents before the assessing authority.
  4. Whether the bank attachment based on the impugned assessment should continue after setting aside the assessment order.

Petitioner's Arguments

The petitioner submitted that:

  • The turnover related to Karuppatti (Palm Jaggery), which is a primary agricultural produce exempt from GST under Notification No. 2/2017-CTR.
  • GST had already been discharged on taxable goods such as oil cake, and there was no suppression of turnover or misclassification.
  • The exemption was denied merely on assumptions without verifying invoices, stock records, or the actual nature of the goods.
  • The petitioner could not participate in the assessment proceedings because a part-time accountant failed to inform about the notices and hearing dates, resulting in a bona fide lapse leading to the ex parte order.

Respondent's Arguments

The respondent defended the assessment order stating that:

  • Multiple opportunities had been provided to the petitioner during the assessment proceedings.
  • Since the petitioner failed to respond or appear, the assessment was rightly completed ex parte under Section 73 of the TNGST Act.
  • The assessment was based on the discrepancies noticed regarding the exemption claimed on outward supplies.

Court Order / Findings

The Madras High Court observed that:

  • The petitioner had offered a plausible explanation for not participating in the assessment proceedings.
  • The dispute related to the exemption of Karuppatti (Palm Jaggery), which required proper verification of invoices, stock records, and supporting documents.
  • Considering the nature of the commodity and the explanation furnished, the petitioner deserved an opportunity to substantiate the exemption claim before the assessing authority.
  • Since the commodity involved was claimed to be exempt from GST, the Court granted relief without imposing any conditions.

Accordingly, the Court:

  • Set aside the assessment order dated 12.12.2025.
  • Remanded the matter to the assessing authority for fresh adjudication.
  • Directed the petitioner to appear before the authority and submit all supporting documents.
  • Directed the respondent to pass a fresh order in accordance with law after considering the petitioner's submissions.
  • Ordered that any bank attachment made pursuant to the impugned assessment shall stand lifted.
  • Allowed the writ petition without costs.

Important Clarification

  • Ex parte GST assessments can be interfered with where the assessee demonstrates a bona fide reason for non-appearance and raises a genuine dispute requiring factual verification.
  • Claims relating to exemption of agricultural produce should be decided after examining invoices, stock records, and other supporting evidence.
  • Where the assessment itself is set aside, consequential recovery proceedings, including bank attachment, are liable to be withdrawn.
  • The judgment reiterates the importance of providing an effective opportunity of hearing before finalizing assessments under Section 73 of the TNGST Act.

Sections Involved:

  • Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act)
  • Article 226 of the Constitution of India
  • Notification No. 2/2017-Central Tax (Rate) – Exemption for Specified Agricultural Produce

Link to Download the Order-https://mytaxexpert.co.in/uploads/1784626130_1779compressed.pdf

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