Facts of the Case

The petitioner challenged an ex parte order dated 17.02.2025 in Form GST DRC-07, contending that since the notice was served only through the online portal, it remained unaware of the proceedings. A sum of Rs.1,23,419/- had already been recovered from the petitioner, and the balance representing 25% of the disputed tax amount (Rs.1,34,593/-) remained payable, with the petitioner's ITC account attached in connection with the demand.

Issues Involved

  1. Whether an ex parte order passed after service only through the online portal should be set aside on terms of a deposit representing 25% of the disputed tax.

Petitioner's Arguments

  • The impugned order was an ex parte order and, since notice was served only through the online portal, the petitioner remained unaware of it.
  • The petitioner was willing to deposit the balance amount required to make up 25% of the disputed tax through the electronic cash ledger within thirty days.

Respondent's Arguments

  • In similar matters, relief has been granted by directing the assessee to deposit 25% of the disputed tax amount, and the same approach should apply here.

Court Order / Findings

  • Since Rs.1,23,419/- had already been recovered and the petitioner undertook to deposit the balance of Rs.1,34,593/- (together making up 25% of the disputed tax) through the electronic cash ledger within thirty days, the Court directed that, upon such deposit, the attachment on the petitioner's ITC account shall be raised forthwith and the impugned order shall stand quashed.
  • The petitioner was directed to thereafter reply to the show-cause notice within thirty days, with the first respondent to grant a personal hearing and pass a final order within two months.
  • It was made explicit that if the petitioner failed to deposit the amount or file its reply within the stipulated period, the benefit of the order would stand automatically recalled and the impugned order could be enforced as it stood.

Important Clarification

  • Where an ex parte GST demand order results from notice served only through the online portal, the Madras High Court's Madurai Bench follows a settled practice of quashing the order on terms of a 25% cash deposit of the disputed tax (net of any amount already recovered), coupled with raising any ITC-account attachment and a fresh opportunity to reply and be heard.
  • Such conditional relief is self-executing in reverse: non-compliance with either the deposit or the reply-filing timeline automatically revives the original order without need for a further round of litigation.

Sections Involved

  • Form GST DRC-07 -- summary of order creating demand.
  • GST provisions on attachment of Input Tax Credit accounts and service of notices through the online portal.

Decision – In Favour of

Assessee (conditional). The ex parte order was quashed on terms of a 25% cash deposit, with the ITC attachment to be lifted and a fresh reply/hearing to follow.

Case Details

Madurai Bench of the Madras High Court; W.P.(MD)No.26548 of 2025 & W.M.P.(MD)Nos.20594 to 20596 of 2025; Coram: Justice G.R. Swaminathan; Order dated 23.09.2025.

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