Facts of the Case

I. Vetrivel, a contractor (GSTIN 33ACOPV5310J4ZA), challenged an Order-in-Original dated 27.02.2025 passed under Section 73 of the Tamil Nadu GST Act, 2017 (Ref. ZD330225290958Z, Form GST DRC-07) for the financial year 2020-21. The petitioner explained that this was a recurring show-cause notice, and that for the subsequent assessment year an identical notice was issued to which he filed a detailed reply; after enquiry, the department dropped the substantial portion of that subsequent year's demand. For the year impugned before the Court, however, the petitioner had failed to file any reply or supporting documents, resulting in a full ex-parte demand causing him considerable hardship.

Issues Involved

  1. Whether the assessment order should be set aside where an identical recurring show-cause notice for the next tax period was substantially dropped by the department after considering the assessee's reply.

Petitioner's Arguments

  • The dispute is recurring in nature and the outcome for the subsequent year — where the department, after enquiry, dropped most of the demand — is equally applicable to the impugned year.
  • Failure to reply in the present case was inadvertent, and the petitioner should not be made to suffer a disproportionate tax, interest and penalty liability as a result.

Respondent's Arguments

  • No interim direction for payment of tax could be accepted, given that the subsequent proceedings on the same issue had already been dropped.

Court Order / Findings

  • Since there could be no sustainable demand once the subsequent identical proceedings were dropped, the Court was inclined to set aside the assessment order.
  • The petitioner was directed to submit a detailed reply, following which an enquiry is to be conducted and completed within four months.
  • A personal hearing was directed to be granted to the petitioner without fail, with liberty to appear in person.

Important Clarification

  • Where a recurring show-cause notice for a subsequent tax period is substantially dropped by the department on merits after a proper reply, that outcome is a strong ground to set aside an ex-parte assessment for an earlier, identical period and to secure a fresh, contested hearing.

Sections Involved

  • Section 73 of the Tamil Nadu GST Act, 2017 — determination of tax not paid/short paid, resulting in Form GST DRC-07 demand.

Decision – In Favour of

In favour of the Assessee — the assessment order was set aside and the matter remanded for a fresh reply, enquiry and personal hearing.

Case Details

Court: Madurai Bench of the Madras High Court — Case No.: W.P(MD) No. 15494 of 2025 with W.M.P(MD) Nos. 11720 and 11721 of 2025 — Coram: Hon'ble Justice S. Srimathy — Date of Order: 6 June 2025.

Link to Download the Order

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