Facts of the Case

Tvl.S.R.Powers, a proprietorship represented by P. Velmurugan and registered under GSTIN 33ADXPV9128L2ZH for FY 2019-20, suffered an ex-parte assessment order dated 21.08.2024 passed by the Deputy State Tax Officer-1, Sankarankovil Assessment Circle, Tenkasi District. The petitioner's case was that since notice had been served only through the online GST portal, it was unaware of the proceedings until the order was passed and its Input Tax Credit account was attached.

Issues Involved

  1. Whether an ex-parte GST order passed after notice served only through the online portal should be set aside on terms similar to comparable ex-parte assessment matters.
  2. What pre-deposit percentage is appropriate where the Department points to a practice of directing 25% deposits in similar cases.
  3. Whether the resultant attachment on the petitioner's ITC ledger should be released upon compliance with the deposit condition.

Petitioner's Arguments

  • The petitioner submitted that since notice was served only through the online portal, it remained unaware of the proceedings, resulting in an ex-parte order being passed without any real opportunity to respond.

Respondent's Arguments

  • The learned Additional Government Pleader submitted that in similar matters, relief had been granted by directing the assessee to deposit 25% of the disputed tax amount (drawing an analogy to the practice followed in comparable income tax matters) as a condition for reconsideration.

Court Order / Findings

  • The petitioner undertook to deposit 25% of the disputed tax amount through the electronic cash ledger within thirty days from receipt of the order.
  • The Court accepted this arrangement, directing that upon such deposit the attachment effected on the petitioner's ITC account would be raised forthwith and the impugned order would stand quashed, with the petitioner thereafter required to reply to the show cause notice within a further thirty days, following which a personal hearing would be granted and a final order passed within two months.
  • The order made clear that if the petitioner failed to deposit the amount or file its reply within the stipulated periods, the benefit of the order would stand automatically recalled and the original impugned order would become enforceable again; the writ petition was disposed of accordingly, with no costs.

Important Clarification

  • In ex-parte GST assessments arising from portal-only service, Madras High Court continues to grant conditional relief pegged to a pre-deposit — here 25% of the disputed tax, drawing on the analogous practice in income tax matters — rather than a blanket quashing.
  • Release of an ITC ledger or bank attachment is typically made contingent on, and simultaneous with, compliance with the pre-deposit condition.
  • Such conditional orders are structured to automatically lapse and revive the original demand if the assessee fails to meet the deposit or reply deadlines, ensuring the relief is not open-ended.

Sections Involved

  • Central Goods and Services Tax Act, 2017 – governs assessment and recovery, with the ex-parte order and ITC attachment arising under its provisions.
  • Article 226 of the Constitution of India – the writ jurisdiction invoked for certiorarified mandamus against the ex-parte order.

Decision – In Favour of

In favour of the assessee, subject to conditions — the ex-parte order and ITC attachment were set aside/released on payment of a 25% pre-deposit and filing a fresh reply within the time granted.

Case Details

Court: Madurai Bench of the Madras High Court
Case No.: W.P.(MD)No.25993 of 2025 and W.M.P.(MD)No.20317 of 2025
Coram: Hon'ble Mr. Justice G.R. Swaminathan
Date of Order: 22.09.2025

Link to Download the Order

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