Demand Proceedings Suspended Because SC Is Yet to Decide GST on Seigniorage Fee

S. Balasubramani Vs State Tax Officer (Madras High Court)

The Madras High Court considered a writ petition challenging an assessment order dated 23.02.2026 passed under Section 74 of the Tamil Nadu Goods and Services Tax Act. The dispute concerned whether seigniorage fee amounting to ₹5,20,300 paid by the petitioner could be subjected to GST at the rate of 18%. Both parties informed the Court that the issue is pending before the Supreme Court in Udaipur Chambers of Commerce and Industry and others v. Union of India and others and that an interim order has already been granted by the Supreme Court.

Taking note of the pending proceedings, the High Court directed that the impugned assessment order and the consequent demand, if any, shall remain in abeyance until the Supreme Court decides the issue. The Court further clarified that if the Supreme Court rules in favour of the Revenue, the petitioner may pursue available remedies thereafter, whereas if the ruling favours the assessee, all consequential proceedings shall stand dropped.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

This Writ Petition challenges the impugned order of assessment dated 23.02.2026 passed under Section 74 of the Tamil Nadu Goods and Services Act.

2. The controversy pertains to whether the seigniorage fee paid by the petitioner, amounting to a sum of Rs.5,20,300/-, can be subjected to tax at the rate of 18%.

3. Learned counsel on both sides would submit that the issue is at large before the Honorable Supreme Court of India in Udaipur Chambers of Commerce and Industry and others Vs. Union of India and others (SLP (Civil) No.37326 of 2017), in which an interim order has also been granted by the Hon’ble Supreme Court of India.

4. In view thereof, the impugned order of assessment and the consequent demand, if any, shall be kept in abeyance, pending the decision of the Hon’ble Supreme Court of India. If the verdict of the Hon’ble Supreme Court of India is in favour of the revenue, a further cause of action to challenge the impugned order, including by way of filing a statutory appeal, shall arise from the date of receipt of the judgment of the Hon’ble Supreme Court of India. If the judgment of the the Hon’ble Supreme Court of India is in favour of the assessee, all further proceedings pursuant to the impugned orders shall stand dropped.

5. Accordingly, this Writ Petition is disposed of. No costs. Consequently, connected Miscellaneous Petition is closed.