Sakthi Ganapathy Tex Vs Deputy State Tax Officer-1 (Madras High Court)
Summary: The Madras High Court set aside an order dated 12.12.2025 passed under Section 73 of the TNGST Act, 2017, after noting that the order had been issued without hearing the petitioner and that the alleged breach appeared prima facie to be minor. The petitioner had challenged the order on the grounds of breach of principles of natural justice and that it had merely committed a minor breach. Referring to Section 126(1) of the applicable GST enactments, the petitioner contended that the alleged breach fell within the scope of a minor breach and that a disproportionate penalty was being imposed merely because Section 73(9) prescribed a minimum penalty.
The petitioner, without prejudice, agreed to remit the entire tax demand as a condition for remand. The Court observed that, on comparison of Section 74(1) and Section 73(9), no minimum sum was prescribed in Section 74(1), whereas a minimum of Rs.10,000/- was fixed in Section 73(9). Although this could form the basis of a constitutional challenge, interference on that ground was not warranted in the absence of such a challenge.
Nevertheless, considering the absence of hearing and the prima facie minor nature of the breach, the Court directed that, subject to the petitioner remitting the tax demand within thirty days from receipt of the order, the impugned order would stand set aside and the matter would be remanded for reconsideration. A reasonable opportunity was directed to be provided and a fresh order was required within five months from the remittance. Subject to fulfilment of the condition, any bank attachment relating to the impugned order was also directed to be raised.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order dated 12.12.2025 is assailed both on the ground of breach of principles of natural justice and on the ground that the petitioner merely committed a minor breach.
2. Mr.R.Sethu Prabakaran, learned Government Advocate (Tax), accepts notice on behalf of the respondent.
3. Referring to Section 126(1) of applicable GST enactments, learned counsel for the petitioner contends that the breach alleged against the petitioner falls squarely within the scope of minor breach. He submits further that disproportionate penalty is being imposed for such minor breach merely because Section 73(9) fixes a minimum penalty. Without prejudice, learned counsel submits that the petitioner agrees to remit the entire tax demand under the impugned order as a condition for remand. An endorsement to that effect has been made on the bundle.
4. On comparison of Section 74(1) and Section 73(9), it is noticeable that no minimum sum is prescribed in Section 74(1), whereas a minimum of Rs.10,000/- is fixed in Section 73(9). While this could be the basis for a constitutional challenge to these provisions, in the absence of such challenge, interference on this ground is not warranted. Nonetheless, the order was issued without hearing the petitioner and the breach appears prima facie to be minor. Considering these aspects, subject to the petitioner remitting the tax demand within thirty days from the date of receipt of a copy of this order, the impugned order is set aside and the matter is remanded for re-consideration so as to provide an opportunity to the petitioner to contest the tax proposals on merits. After providing a reasonable opportunity to the petitioner, a fresh order shall be issued within five months from the date of the petitioner making the remittance in the manner specified above. It is needless to say that it is also open to the petitioner to challenge the relevant provisions in accordance with law. Subject to fulfilment of this condition, any bank attachment relating to the impugned order shall be raised.
5. The writ petition is disposed of on the above terms. Consequently, connected writ miscellaneous petitions are closed. There shall be no order as to costs.
