Tvl.P.Rengasamy Vs Deputy State Tax Officer-2 (Madras High Court)
In Tvl.P.Rengasamy Vs Deputy State Tax Officer-2, the Madras High Court set aside an assessment order passed under Section 74 of the TNGST Act, 2017, and remanded the matter for fresh adjudication. The assessment order dated 18.07.2025 had been passed ex parte due to the petitioner’s failure to respond to proceedings.
The dispute related to an output tax mismatch between Form GSTR-1 and GSTR-3B returns vis-à-vis Form GSTR-7. The assessee explained that in government contract works, transactions are often reported by Government departments in Form GSTR-7 only upon release of funds and deduction of TDS at 2%, resulting in variations. The assessee also contended that Section 74 could not be invoked without establishing fraud, wilful misstatement, or suppression of facts with intent to evade tax.
For non-participation in the proceedings, the petitioner stated that the part-time accountant failed to notice the notices, there were issues accessing the web portal, and replies were not filed due to work pressure, resulting in the ex parte order.
The Court held that the assessee should be given an opportunity to submit explanations and supporting documents. Since 23% of the disputed CGST and SGST demand had already been recovered, the Court waived the usual condition of depositing 25% of the disputed tax. The matter was remanded for fresh consideration, and bank account attachments pursuant to the assessment order were directed to be lifted.
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