Tvl.One Plus Technology Vs State Tax Officer (Madras High Court)
The Madras High Court has intervened in favor of a taxpayer, Tvl. One Plus Technology, by quashing a GST demand order amounting to over 50 lakh. The court found that the order, issued by the State Tax Officer, lacked proper reasoning and indicated a “clear non-application of mind” by the respondent.
The case involved a challenge by Tvl. One Plus Technology against an order dated December 4, 2024, which followed a series of notices in Form GST DRC-01A and DRC-01. The petitioner had submitted a reply on November 8, 2024, to the proposals outlined in the notices. However, the impugned order dismissively stated that the reply was “not convincing and are not acceptable and are not found to be in order, since they are not supported with valid documentary evidences.” It then proceeded to confirm the tax liability, penalty, and interest proposed, totaling 50,48,638.
The court observed that the order’s operative portion provided no specific reasons for rejecting the taxpayer’s reply, merely labeling it as “not convincing.” This lack of detailed justification led the court to conclude that the tax officer had not adequately considered the petitioner’s submissions. The total liability confirmed included SGST, CGST, and IGST components for tax, penalty under Section 73(5), general penalty under Section 125, and interest under Section 50(1) for the financial year 2023-24.
Though the petitioner had initially filed a belated appeal with the appellate Commissioner, which was dismissed, the Madras High Court took up the writ petition. Citing similar circumstances where it had previously provided relief to taxpayers on terms, the court noted that One Plus Technology had already deposited 10% of the disputed tax during the appeal process, and more than 25% had been recovered subsequently. While no specific judicial precedents were explicitly named in the provided text, the court’s reference to acting under “similar circumstances” implies a consistent judicial stance on ensuring principles of natural justice and reasoned orders are followed in tax assessments. Courts frequently quash orders that are non-speaking or passed without considering the taxpayer’s reply, upholding the procedural fairness essential in administrative actions.
Consequently, the Madras High Court quashed the impugned order and remitted the case back to the respondents for a fresh adjudication on merits. The court directed the tax authorities to pass a new order after providing the petitioner with a proper hearing within three months. Tvl. One Plus Technology has been granted 30 days to file a comprehensive reply, treating the quashed order as an addendum to the original show cause notice, and is expected to produce all relevant documents and evidence. The court emphasized that the petitioner was not heard before the initial impugned order was passed, highlighting a procedural lapse.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Mr.R.Suresh Kumar, learned Additional Government Pleader takes notice for the respondents.
2. The petitioner has challenged the impugned order dated 04.12.2024 passed by the respondents pursuant to the issuance of notice in Form GST DRC 01A, dated 05.09.2024 and a notice in Form GST DRC-01, dated 10.10.2024 to which the petitioner has also replied. However, the impugned order indicates that the only consideration was the reply filed by the petitioner, dated 08.11.2024 is not conceivable. The operative portion of the impugned order reads as under:
The reply of the taxable person filed are carefully examined and verified. The are not convincing and are not acceptable and are not found to be in order, since they are not supported with valid documentary evidences. I therefore confirm the proposals already made in the notice and pass orders for the year 2023-24 as follows:
| Details | SGST | CGST | IGST |
|---|---|---|---|
| Tax Liability (GSTR 3B VS E Way Bills) | 5,11,247/- | 5,11,247/ | 30,65,382/- |
| Penalty Liability at 10% u/s 73(5) | 51,125/- | 51,125/- | 30,65,38/- |
| General Penalty (u/s 125) [Non Maintenance of accounts and Registers) | 25,000/- | 25,000/- | |
| Interest Liability at 18% u/s 50(1) [as on 04.12.2024] | 62,778/- | 62,778/- | 3,76,412/- |
| Total Liability | 6,50,150/- | 6,50,150/- | 37,48,332/- |
| Total | 50,48,638/- | ||
Rs.50,48,632/-(Rupees. Fifty lakhs forty Eight thousand six hundred and thirty two only)
Note:
Please note that interest has been calculated up to the date of issuing order from the date of due u/s 50 of TNGST Act 2017. While making payment, interest for the period between the date of order and the date of payment shall also be worked out and paid along with the dues stated in the order. Penalty has been levied at 10% of the tax due or Rs.10000 (Rs.20000 in case of IGST) whichever is higher as per section 73(9) of CGST/SGST Act, 2017 and 4th provision to Section 20 of IGST Act, 2017.
DRC 07 is uploaded in the Common Portal.
3. Thus, there is a clear non-application of mind on the part of the respondent while passing the impugned order. Although the petitioner had filed an appeal belatedly before the appellate Commissioner, the same came to be dismissed vide order dated 26.04.2025. Aggrieved by the said order, petitioner filed a writ petition in W.P(MD)No.17169 of 2025. The petitioner did not press for the relief in the said writ petition.
4. Under similar circumstances, this Court has come to rescue the persons like the petitioner on terms. In this case, at the time of filing of the appeal before the appellate Commissioner, the petitioner had deposited 10% of the disputed tax. That apart, more than 25% of the disputed tax have been recovered during the course of time.
5. Considering the same, the impugned order is quashed and the case is remitted back to the respondents to pass fresh orders on merits and in accordance with law after hearing the petitioner within a period of three months from the date of receipt of a copy of this order. The petitioner shall file a reply to the show cause notice by treating the impugned order as an addendum to the show cause notice within a period of 30 days from the date of receipt of a copy of this order. It is noticed that the petitioner was also not heard before the impugned order passed. It is made clear that the petitioner shall produce relevant documents and evidence to
6. The writ petition stands disposed of. No costs. Consequently, the connected miscellaneous petitions are closed.
