Facts of the Case

M/s. MGG Trading Private Limited (GSTIN 33AAHCM7526M1Z4), Tirunelveli, challenged an ex parte order dated 30.09.2024 (Order No. ZD330924200837B) for FY 2018-19, passed by the Assistant Commissioner, Commercial Tax Office, Tirunelveli Junction Circle, before the Madurai Bench of the Madras High Court under Article 226 of the Constitution. The petitioner stated that the notice preceding the order had been served only through the online GST portal and never came to its actual knowledge, resulting in an ex parte determination and an attachment on its Input Tax Credit account. The Additional Government Pleader submitted that in comparable matters the Court had granted relief on the assessee depositing 25% of the disputed tax.

Issues Involved

  1. Whether an order passed ex parte, based solely on notice uploaded to the GST portal without the assessee's actual knowledge, should be set aside.
  2. On what terms relief can be granted so as to balance the assessee's right to be heard against the revenue's interest in the disputed tax.

Petitioner's Arguments

  • The notice preceding the impugned order was served only through the online GST portal, and the petitioner was genuinely unaware of it.
  • The resulting order was passed ex parte without any real opportunity to respond, and its Input Tax Credit account had been attached as a consequence.
  • The order deserved to be quashed with liberty to reply to the show-cause notice and be heard afresh.

Respondent's Arguments

  • The Additional Government Pleader submitted that in similar matters the Court had granted relief conditional on the assessee depositing 25% of the disputed tax through the electronic cash ledger.
  • No objection was raised to quashing the order once such a deposit was made.

Court Order / Findings

  • Recording the petitioner's undertaking to deposit 25% of the disputed tax within thirty days through the electronic cash ledger, the Court directed that upon such compliance the impugned order shall stand quashed and the attachment on the ITC account shall be raised forthwith.
  • The petitioner was directed to thereafter file a reply to the show-cause notice within thirty days, and the department was directed to grant a personal hearing and pass a fresh order within two months.
  • Failure to make the deposit or file the reply within the stipulated period would automatically revive the benefit granted, allowing the impugned order to be enforced as it stood.
  • The writ petition was disposed of accordingly with no costs.

Important Clarification

  • Courts are routinely conditioning the setting aside of ex parte GST orders — arising from notices served only through the portal — on a 25% pre-deposit of the disputed tax.
  • Such relief comes with a strict timeline: reply to the SCN within thirty days of the deposit, personal hearing, and a fresh order within two months.
  • Non-compliance with either the deposit or the reply timeline automatically forfeits the relief, reviving the original order for enforcement — making prompt compliance essential.

Sections Involved

  • CGST/TNGST Act, 2017 — the governing statute under which the disputed tax demand and the consequential ITC restriction arose.
  • Rule 86A, CGST Rules, 2017 — empowers the department to restrict debit from the electronic credit ledger, corresponding to the ITC attachment referred to in the order.
  • Article 226, Constitution of India — invoked for the writ of certiorari against the ex parte order.

Decision – In Favour of

Disposed of with directions, in favour of the assessee, conditional on a 25% pre-deposit of the disputed tax and compliance with the reply and hearing timeline fixed by the Court.

Case Details

Court: Madurai Bench of Madras High Court
Case No.: W.P.(MD) No.23610 of 2025 and W.M.P.(MD) Nos.18534 and 18536 of 2025
Coram: Hon'ble Mr. Justice G.R. Swaminathan
Date of Order: 01.09.2025

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