Facts of the Case

The petitioner, Tvl.EPR Loganathan and Company, challenged an assessment order dated 11.03.2026 passed under Section 73 of the TNGST Act, 2017 for the assessment year 2020-21, along with the consequential Form GST DRC-07. The assessment was made ex-parte because the petitioner did not utilise the opportunities provided, a discrepancy having arisen between GSTR-7 and GSTR-3B figures. The petitioner explained that its earlier in-house consultant had left the business and the new consultant, who took charge only in March 2026, noticed the order on the portal for the first time, there having been no physical service of the proceedings.

Issues Involved

  1. Whether an ex-parte assessment order, passed after the taxpayer failed to respond to portal-only intimations due to a bona fide consultant-transition issue, warranted an opportunity to contest the matter on merits, and on what conditions.

Petitioner's Arguments

  • The petitioner explained that the discrepancy could be reconciled and sought an opportunity to present its explanation and supporting documents, attributing the earlier non-participation to loss of its consultant and the absence of physical service of the proceedings.

Respondent's Arguments

  • The Additional Government Pleader represented the revenue's position defending the ex-parte assessment as validly passed after the petitioner failed to avail the opportunities extended.

Court Order / Findings

  • Considering the nature of the discrepancy, the assessee's explanation, and the reason given for non-participation, the Court found it appropriate to grant an opportunity, but only on equitable terms.
  • The Court allowed the writ petition on condition that the petitioner deposit 25% of the disputed tax amount within four weeks, upon which the impugned order would stand set aside and the matter remanded for the assessee to file its reply and supporting documents; any consequential bank-account attachment was directed to stand raised upon the deposit.

Important Clarification

  • Where an ex-parte GST assessment results from a bona fide administrative lapse — such as a change of accounting consultant coinciding with portal-only service of notices — courts have granted a further opportunity to contest the assessment on merits, but consistently condition such relief on the assessee depositing a percentage (commonly 25%) of the disputed tax amount, balancing equitable relief against the need for revenue protection.
  • A consequential bank-account attachment made pursuant to the now-set-aside assessment is ordinarily lifted once the conditional deposit is made, restoring the assessee's operational liquidity pending fresh adjudication.

Sections Involved

  • Section 73 of the TNGST Act, 2017 - governs determination of tax not paid other than by reason of fraud.
  • Form GST DRC-07 under the CGST/TNGST Rules, 2017 - the summary of the assessment order raising demand.

Decision – In Favour of

The writ petition was allowed in favour of the Assessee, subject to the condition of a 25% pre-deposit of the disputed tax; the assessment was set aside and remanded for a fresh decision on merits.

Case Details

Madurai Bench of Madras High Court, W.P.(MD)No.12176 of 2026 with W.M.P(MD)Nos.9119 and 9122 of 2026; Coram: Hon'ble Mr. Justice D. Bharatha Chakravarthy; decided on 24 April 2026.

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