Facts of the Case

Tvl. Saravana Blue Metals, Theni (GSTIN 33CHXPS5625K1ZJ), challenged an assessment order dated 13.04.2026, passed under Section 73 of the Tamil Nadu GST Act, 2017 and issued as Form GST DRC-07, before the Madurai Bench of the Madras High Court. The dispute concerned levy of GST on seigniorage fees, an issue presently pending before the Supreme Court of India. The petitioner had not availed the opportunity when the earlier show-cause notice was issued and had failed to submit supporting documents at that stage.

Issues Involved

  1. Whether an assessment order on the disputed question of GST on seigniorage fees, passed while the issue is sub judice before the Supreme Court, should be set aside and remanded even though the petitioner did not respond to the original show-cause notice.
  2. Whether the usual pre-deposit condition for such relief should apply given that the tax incidence itself remains unsettled.

Petitioner's Arguments

  • Relied on the Court's consistent practice of directing authorities to await the Supreme Court's ruling on the seigniorage-fee GST question, even while permitting assessment proceedings to continue procedurally.

Respondent's Arguments

  • The Government Standing Counsel confirmed the Court's practice, placing on record two coordinate orders — M/s. Marginal M Sand and Tvl. Rajapalayam Cement and Chemicals — permitting completion of proceedings but keeping final/appellate orders in abeyance pending the Supreme Court's decision.

Court Order / Findings

  • Noting that the order of assessment had already been passed, but the petitioner had not used the show-cause notice opportunity to submit supporting documents, the Court decided to grant a further opportunity given that "the very incidence of tax itself is at large."
  • Unlike its usual practice of imposing a 25% pre-deposit condition for such relief, the Court declined to impose any deposit condition here, precisely because the underlying taxability itself remains open before the Supreme Court.
  • The impugned order was set aside and the matter remanded, with the petitioner directed to file its reply and supporting documents within two weeks, the respondent to consider the matter afresh, but final orders — and any consequent enforcement or demand — to be kept in abeyance until the Supreme Court decides the seigniorage-fee question, with the petitioner free to take further steps once that judgment is pronounced.

Important Clarification

  • Where the very taxability of a transaction, such as GST on seigniorage fees paid for mining rights, is pending before the Supreme Court, courts are permitting assessment proceedings to be completed procedurally.
  • Courts are withholding any pre-deposit condition on the assessee and keeping enforcement of the resultant demand in abeyance until the Supreme Court rules, protecting taxpayers from being forced to pay or fully contest an unsettled dispute prematurely.

Sections Involved

  • Section 73, CGST/TNGST Act, 2017 — determination of tax not paid, under which the assessment order was passed.
  • Article 226, Constitution of India — writ jurisdiction invoked to challenge the assessment order.

Decision – In Favour of

The decision is in favour of the assessee procedurally. The order was set aside and remanded without a pre-deposit condition, with enforcement kept in abeyance pending the Supreme Court's ruling on the substantive seigniorage-fee GST question.

Case Details

Court: Madurai Bench of Madras High Court
Case No.: W.P.(MD) No.15385 of 2026 and W.M.P.(MD) No.11531 of 2026
Coram: Hon'ble Mr. Justice D. Bharatha Chakravarthy
Date of Order: 09.06.2026

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