Facts of the Case

The petitioner, Tvl. Jothi Modern Rice Mill, challenged an assessment order dated 16.12.2025 passed under Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017. The assessment was completed ex parte as the petitioner failed to respond to the notices issued by the department.

The primary basis of the assessment was the alleged non-submission of supporting documents in support of the petitioner's claim for GST exemption.

The petitioner contended that it was engaged exclusively in the supply of unbranded rice, which is exempt from GST under Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017, and that the assessment was completed without considering the exemption claim. The petitioner further explained that the accountant failed to inform it about the proceedings and the order uploaded on the GST portal, resulting in the non-submission of the reply.

Issues Involved

  1. Whether an ex parte assessment passed under Section 73 can be sustained where the assessee failed to participate due to lack of knowledge of the proceedings.
  2. Whether an assessee claiming GST exemption on the supply of unbranded rice should be granted an opportunity to produce supporting documents before the assessing authority.
  3. Whether the assessment order deserved to be set aside in the interest of natural justice.

Petitioner's Arguments

  • The petitioner submitted that it deals exclusively in unbranded rice, which is exempt from GST.
  • The exemption is available under Serial No. 70, HSN Code 1006 of Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017.
  • The levy of GST on exempt supplies was therefore incorrect.
  • The petitioner expressed readiness to file all supporting documents before the assessing authority to substantiate the exemption claim.
  • It was also explained that the accountant had failed to inform the petitioner about the departmental proceedings and the assessment order uploaded on the GST portal, causing the petitioner to miss the opportunity to submit its reply.

Respondent's Arguments

The respondent supported the assessment order, pointing out that:

  • The petitioner had failed to utilize the opportunities provided during the assessment proceedings.
  • Supporting documents required for claiming GST exemption were not furnished before the assessing authority.
  • Consequently, the assessment was completed ex parte under the provisions of the GST law.

Court Order / Findings

The Madras High Court observed that the petitioner had raised a substantial claim of exemption relating to the supply of unbranded rice and had also furnished a reasonable explanation for not participating in the assessment proceedings.

The Court held that:

  • Since the exemption claim required examination based on supporting records, the petitioner deserved one more opportunity to place the relevant documents before the assessing authority.
  • The Court has consistently granted such opportunities on equitable grounds where sufficient cause is shown.
  • Considering the nature of the exemption claim, the Court did not impose the usual condition requiring payment of 25% of the disputed tax before granting relief.

Accordingly, the Court:

  • Set aside the assessment order dated 16.12.2025.
  • Remanded the matter to the assessing authority for fresh consideration.
  • Directed the petitioner to appear before the authority and submit all relevant documents.
  • Directed the assessing authority to pass a fresh order in accordance with law.
  • Ordered that any bank attachment made pursuant to the impugned assessment shall stand lifted.
  • Permitted the authorities to act upon the web copy of the judgment without waiting for the certified copy.

Important Clarification

  • Ex parte GST assessment orders may be set aside where the assessee demonstrates a genuine reason for non-participation and raises a bona fide exemption claim.
  • Courts continue to emphasize adherence to the principles of natural justice before confirming tax liability.
  • Claims relating to GST exemption on unbranded rice must be examined after providing adequate opportunity to produce supporting records.
  • Where the dispute relates to an exemption claim with prima facie merit, the Court may dispense with the condition of pre-deposit while remanding the matter.

Section Involved

  • Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017

Link to Download the Order  https://mytaxexpert.co.in/uploads/1784874669_1947compressed.pdf

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