The Madurai Bench of the Madras High Court has set aside an ex parte GST assessment order passed under Section 74 of the TNGST Act, 2017, holding that the assessee deserves a fresh opportunity to present their case, particularly when a substantial portion of the disputed tax has already been recovered.
The bench of Justice D.Bharatha Chakravarthy has observed that the nature of discrepancies and the reasons for non-appearance warranted granting another opportunity to the assessee. The Court emphasized that such opportunities may be extended on equitable grounds, subject to appropriate conditions.
The petitioner, a works contractor, challenged the assessment order dated July 18, 2025, on grounds of violation of statutory provisions and lack of proper opportunity to respond. The matter was heard by Justice D. Bharatha Chakravarthy on April 27, 2026.
The order had been passed ex parte under Section 74, which deals with cases involving allegations of fraud, wilful misstatement, or suppression of facts. The tax authorities had pointed out discrepancies, including mismatches between GSTR-1, GSTR-3B, and GSTR-7 returns, along with the imposition of penalty and interest.
The petitioner contended that the discrepancies arose due to timing differences in reporting by government departments, particularly in relation to TDS under GSTR-7. It was argued that the work executed had been duly reported and taxes paid, but government departments often reported transactions only upon release of funds, leading to apparent mismatches.
On the issue of non-participation in the assessment proceedings, the petitioner submitted that the show cause notice was overlooked due to lapses by a part-time accountant, compounded by difficulties in accessing the GST portal. Consequently, no reply was filed, resulting in the ex parte order.
Ordinarily, courts impose a condition requiring deposit of 25% of the disputed tax to grant such relief. However, in this case, the Court noted that 23% of the disputed tax had already been recovered by the department. Considering this, it waived any further pre-deposit requirement.
Accordingly, the High Court set aside the assessment order and remanded the matter back to the assessing authority for fresh consideration. The petitioner has been directed to appear before the tax officer within four weeks and submit all relevant documents and explanations. The Court also ordered that any bank attachment made pursuant to the impugned order be lifted.
Case Details
Case Title: Tvl.P.Rengasamy Versus The Deputy State Tax Officer-2
Citation: JURISHOUR-1015-HC-2026(MAD)
Case No.: W.P(MD)No.12728 of 2026
Date: 27.04.2026
Counsel For Petitioner: S.Karunakar
Counsel For Respondent: R.Suresh Kumar
