P.N. Traders Vs Deputy State Tax Officer (Madras High Court)
In a significant ruling emphasizing adherence to statutory procedures and principles of natural justice, the Madras High Court has quashed an assessment order issued by the Deputy State Tax Officer against P.N. Traders for the assessment year 2018-19. The Court found that the tax authorities failed to serve the petitioner with a proper notice seeking an explanation for alleged defects, thereby violating Section 169 of the Tamil Nadu Goods and Service Tax Act, 2017 (TNGST Act).
The petitioner, P.N. Traders, operates as a dealer in both exempted groceries and taxable supplies. The firm regularly files its monthly returns, including GSTR-1 and GSTR-3B, and remits taxes after adjusting eligible Input Tax Credit (ITC) in accordance with the TNGST Act. Despite this regular compliance, an assessment order was passed against them by the respondent on April 26, 2024, for the 2018-19 assessment year.
The core of P.N. Traders’ challenge rested on a fundamental procedural flaw: the alleged non-service of any notice seeking an explanation regarding the purported defects identified by the tax department. The learned counsel for the petitioner vehemently argued that as per Section 169 of the TNGST Act, a notice must be served through specific primary modes, including in person, by registered post, or to the registered e-mail ID. They contended that only upon the failure or impracticability of these prescribed methods could alternative modes of service be employed. Since the department admittedly did not follow these primary modes, the assessment order, they argued, could not be legally sustained.
