Facts of the Case

The petitioner, Tvl. M-S Global Choice Coco Products, challenged the assessment order dated 18.12.2023 passed by the Deputy State Tax Officer II under Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act). The assessment was completed ex parte on the ground that the petitioner had not responded to the notices issued through the GST Portal.

The dispute primarily related to late fee for non-filing of the Annual Return, wherein the petitioner contended that the turnover of ₹3,07,12,499/- considered in the impugned order included exempt turnover. According to the petitioner, being a small-scale trader, the actual taxable turnover had not crossed the prescribed threshold limit.

Issues Involved

  1. Whether an ex parte assessment order passed under Section 73 of the TNGST Act, 2017 should be sustained when the assessee failed to respond due to lack of awareness of notices uploaded only on the GST Portal.
  2. Whether the assessee deserved another opportunity to submit supporting documents and explanations before the Assessing Officer.
  3. Whether the assessment order should be remanded subject to payment of part of the disputed tax.

Petitioner’s Arguments

  • The turnover adopted in the assessment order incorrectly included exempt turnover, thereby inflating the taxable turnover.
  • The petitioner was a small-scale trader, and the actual taxable turnover had not crossed the threshold limit.
  • The petitioner sought one more opportunity to produce records and file a detailed reply before the Assessing Officer.
  • The petitioner explained that the Show Cause Notice and assessment order were uploaded only on the GST Portal, and since the accountant failed to inform the petitioner about the same, no reply could be submitted, resulting in the ex parte assessment.

Respondent’s Arguments

  • The Revenue submitted that sufficient opportunities had already been provided during the assessment proceedings.
  • Since the petitioner failed to avail those opportunities, the assessment was rightly completed ex parte under Section 73 of the TNGST Act, 2017.

Court Order / Findings

The Madurai Bench of the Madras High Court observed that:

  • The petitioner had placed a plausible explanation regarding both the merits of the dispute and the reason for not participating in the assessment proceedings.
  • Considering the nature of the discrepancies and in the interest of justice, the petitioner deserved one more opportunity to present relevant documents before the Assessing Officer.
  • Such opportunity, however, should be granted only on equitable terms.

Accordingly, the Court directed as follows:

  • The petitioner shall deposit 25% of the disputed tax amount within four weeks from receipt of the web copy of the order.
  • Upon such payment, the assessment order dated 18.12.2023 shall stand set aside.
  • The matter shall stand remanded to the Respondent for fresh adjudication.
  • The petitioner shall appear before the Assessing Officer and file a detailed reply along with supporting documents.
  • The Assessing Officer shall pass a fresh order in accordance with law after considering the materials produced.
  • Any bank account attachment made pursuant to the impugned assessment order shall automatically stand lifted upon setting aside of the assessment.

Important Clarification

  • Mere failure to respond to notices uploaded on the GST Portal does not automatically disentitle an assessee from obtaining relief where sufficient explanation is provided.
  • Courts may exercise equitable jurisdiction under Article 226 of the Constitution of India to restore assessment proceedings by granting one final opportunity.
  • Such relief can be made conditional upon payment of a specified percentage of the disputed tax.
  • Setting aside an assessment order also results in lifting consequential recovery proceedings, including bank account attachment, subject to the Court's directions.

Sections Involved

  • Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017
  • Article 226 of the Constitution of India

Link to Download the Order-https://mytaxexpert.co.in/uploads/1784629253_1793compressed.pdf

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