W.P(MD) No.13804 of 2026

Facts of the Case

M/s. Karthika Material Suppliers, represented by its proprietor and registered under GSTIN 33BYMPM6381B1ZE, challenged an assessment order dated 02.02.2026 passed under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017, for the assessment year 2020-21, relating to the levy of GST on seigniorage fees. The subject matter — whether GST applies to seigniorage fees paid on mining royalty — is presently pending before the Supreme Court of India. The petitioner did not respond to the show cause notice or submit supporting documents at that stage, and subsequently approached the Madurai Bench of the Madras High Court seeking to set aside the assessment order.

Issues Involved

  1. Whether the assessment order dated 02.02.2026 on GST-on-seigniorage-fee liability could stand while the core taxability question remains pending before the Supreme Court.
  2. Whether the petitioner, having failed to respond to the show cause notice, could still be granted a fresh opportunity given the pending larger controversy.
  3. The terms on which enforcement of any fresh order should be regulated pending the Supreme Court's decision.

Petitioner's Arguments

  • Counsel for the petitioner submitted that the levy of GST on seigniorage fees is presently pending before the Supreme Court, and that this Court has previously directed authorities to await the Supreme Court's ruling before finalising such matters.

Respondent's Arguments

  • The Additional Government Pleader relied on prior orders of the Court (in M/s.Marginal M Sand and Tvl.Rajapalayam Cement) permitting assessing authorities to complete proceedings, while directing that final orders and enforcement be kept in abeyance until the Supreme Court's decision.

Court Order / Findings

  • The Court noted that the petitioner had not availed the opportunity when the show cause notice was issued and had failed to submit documents supporting its claim, but that since the very incidence of tax on seigniorage fees remains at large before the Supreme Court, the petitioner deserved a further opportunity.
  • Departing from its usual practice of imposing a 25% pre-deposit condition for such indulgence, the Court imposed no additional condition, given the uncertain footing of the tax itself.
  • The impugned order was set aside and the matter remanded; the petitioner was given two weeks to file a reply with supporting documents, but any resulting assessment of tax or penalty, and its enforcement, was directed to be kept in abeyance until the Supreme Court's judgment, after which the petitioner would be entitled to take further steps. The writ petition was allowed on these terms.

Important Clarification

  • Where the taxability of a levy itself is sub judice before the Supreme Court, High Courts permit assessing authorities to complete the procedural steps of assessment while insulating the taxpayer from actual enforcement until the larger question is settled.
  • The pendency of such a larger controversy can justify relaxing the usual pre-deposit condition ordinarily imposed when a defaulting taxpayer is granted a fresh opportunity.

Sections Involved

  • Section 74, Tamil Nadu GST Act, 2017 — determination of tax by reason of fraud, wilful misstatement or suppression of facts.
  • GST on seigniorage fees — the taxability of statutory royalty/seigniorage payments under GST, an issue pending before the Supreme Court of India.

Decision – In Favour of

The matter was disposed of with directions rather than a clean win for either side: the assessment order was set aside and remanded, with enforcement of any fresh liability suspended pending the Supreme Court's ruling — a conditional, partial accommodation for the assessee.

Case Details

Court: Madurai Bench of the Madras High Court
Case Number: W.P(MD) No.13804 of 2026
Coram: Hon'ble Mr. Justice D. Bharatha Chakra Varthy
Date of Order: 30.04.2026

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