Facts of the Case

Tvl. Kavin Karuthiah challenged an assessment order dated 11.11.2024 passed for tax period 2021-22 against GSTIN 33ATVPK0508M1ZE, preceded by a show cause notice in Form DRC-01 dated 19.09.2023 and three separate personal-hearing notices. The petitioner had failed to respond to the notice or appear at any of the three hearings, resulting in an ex-parte order. Recognising that the Madurai Bench of the Madras High Court has, in similar circumstances, granted relief on terms, the petitioner sought the same treatment, offering to deposit 25% of the disputed tax.

Issues Involved

  1. Whether an ex-parte GST assessment order, passed after a taxpayer's complete non-response to a show cause notice and repeated hearing reminders, should be set aside on terms.
  2. What conditions should attach to such relief, consistent with the Court's settled practice in similar matters.
  3. What happens if the taxpayer fails to comply with the conditions imposed.

Petitioner's Arguments

  • Sought the benefit of the Court's established practice of quashing ex-parte GST assessment orders on terms, notwithstanding the taxpayer's own default in responding to the notice and hearing reminders.
  • Offered to deposit 25% of the disputed tax as a condition for reconsideration.

Respondent's Arguments

  • The Government Advocate for the respondent did not oppose the standard terms typically imposed by the Court in comparable cases.

Court Order / Findings

  • The Court observed that, under similar circumstances, it has repeatedly come to the rescue of taxpayers by quashing ex-parte assessment orders on terms, subject to payment of 25% of the disputed tax, and saw no reason to depart from that practice here.
  • Held the impugned order be quashed on terms, subject to the petitioner depositing 25% of the disputed tax in cash from the Electronic Cash Register within 30 days, treating the quashed order as an addendum to the original show cause notice.
  • Directed the petitioner to file a reply to the show cause notice within the same period, with the respondent to pass a fresh order on merits after hearing the petitioner as expeditiously as possible.
  • Clarified that non-compliance with any of the conditions would deem the writ petition dismissed, leaving the department free to proceed under the GST enactments.

Important Clarification

  • The Madurai Bench of the Madras High Court applies a well-settled, near-formulaic remedy for taxpayers who default in responding to a GST show cause notice and hearing reminders: the ex-parte order is quashed and treated as an addendum to the SCN, conditional on payment of 25% of the disputed tax and a fresh reply within a fixed period.
  • This conditional-remand approach balances revenue interest (through the pre-deposit) against the taxpayer's right to be heard, but strictly conditions relief on timely compliance, failing which the writ petition is automatically treated as dismissed.

Sections Involved

  • FORM GST DRC-01, CGST Rules, 2017 – the show cause notice format preceding the assessment.
  • Section 73/74, CGST Act, 2017 – the underlying demand and recovery provisions governing the assessment.

Decision – In Favour of

Disposed of on a conditional basis, in substance in favour of the assessee — the ex-parte order was quashed subject to a 25% pre-deposit and a fresh opportunity to respond and be heard.

Case Details

  • Court: Madurai Bench of the Madras High Court
  • Case No.: W.P(MD)No.19310 of 2025 & W.M.P(MD)No.14845 of 2025
  • Coram: Hon'ble Mr. Justice C. Saravanan
  • Date of Order: 17 July 2025

Link to Download the Order

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