Facts of the Case

The petitioner, Tvl. Anutha Petrol Bunk, challenged the assessment order dated 23.08.2024 passed under Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act) for the assessment year 2019-20, along with the appellate order dated 13.01.2026, whereby the appeal was rejected solely on the ground of delay.

The petitioner contended that while finalising the assessment, the assessing authority had included turnover relating to exempt petroleum products, resulting in an incorrect determination of tax liability. The assessment order was passed ex parte, as the petitioner was unable to effectively participate in the proceedings due to the circumstances explained in the affidavit. Aggrieved by both orders, the petitioner approached the Madras High Court seeking fresh adjudication after providing an opportunity of personal hearing as required under the law.

Issues Involved

  1. Whether an ex parte assessment order passed under Section 73 of the TNGST Act, 2017 without effective opportunity of hearing deserved to be set aside.
  2. Whether rejection of the statutory appeal solely on the ground of delay should prevent reconsideration of the assessment.
  3. Whether inclusion of turnover relating to exempt petroleum products required fresh examination.
  4. Whether the petitioner was entitled to a fresh opportunity under Section 75(4) of the TNGST Act, 2017.

Petitioner’s Arguments

  • The assessment order wrongly included turnover relating to exempt petroleum products, thereby inflating the tax demand.
  • The assessment proceedings were concluded ex parte as the petitioner could not effectively avail the opportunity of hearing.
  • The appellate authority rejected the appeal merely on the ground of delay without examining the merits of the dispute.
  • The impugned orders were cryptic, non-speaking, arbitrary, and liable to be quashed.
  • A fresh opportunity of personal hearing under Section 75(4) should be granted before passing any assessment order.

Respondent’s Arguments

  • The State contended that although petroleum products are exempt goods, the petitioner had wrongfully claimed Input Tax Credit (ITC), thereby justifying the assessment proceedings.
  • It was argued that the petitioner permitted the assessment order to attain finality and approached the appellate authority belatedly.
  • Therefore, rejection of the appeal on limitation was justified.

Court Order / Findings

The Madras High Court observed that considering the nature of the discrepancies, the explanation offered by the assessee, and the reasons for not effectively participating in the assessment proceedings, it would be appropriate to grant one more opportunity to present the case before the assessing authority.

The Court further noted that it had consistently granted such opportunities on equitable grounds subject to suitable conditions. However, since approximately 75% of the disputed turnover related to exempt petroleum products, no additional condition was imposed.

Accordingly, the Court:

  • Set aside the assessment order dated 23.08.2024 and the appellate order dated 13.01.2026.
  • Remanded the matter to the assessing authority for fresh adjudication.
  • Directed the petitioner to appear before the assessing officer and submit all replies and supporting documents.
  • Directed the assessing authority to pass a fresh order strictly in accordance with law after considering the submissions.
  • Ordered that any attachment of the petitioner's bank account made pursuant to the impugned assessment order shall stand lifted.
  • Disposed of the writ petition without costs.

Important Clarification

This judgment reiterates that:

  • An ex parte GST assessment can be set aside where sufficient cause is shown for non-participation.
  • Courts may exercise equitable jurisdiction to restore assessment proceedings despite rejection of appeal on limitation where justice so requires.
  • Authorities must provide meaningful opportunity of hearing in compliance with Section 75(4) of the TNGST Act, 2017.
  • Disputes involving turnover relating to exempt goods require proper factual verification before finalising assessment.
  • Consequential recovery proceedings, including bank account attachment, cannot survive once the underlying assessment order is set aside.

Sections Involved

  • Section 73 – Determination of tax not paid, short paid, erroneously refunded or ITC wrongly availed or utilised (TNGST Act, 2017)
  • Section 75(4) – Opportunity of personal hearing (TNGST Act, 2017)
  • Article 226 of the Constitution of India

Link to Download the Order-https://mytaxexpert.co.in/uploads/1784628136_1788compressed.pdf

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