Assessment order is remanded for fresh adjudication on merits

Assessment order is remanded for fresh adjudication on merits subject to pre-depositing 50% of the disputed tax.

Issue

Whether an assessment order confirming tax demands can be set aside and remanded for de novo (fresh) adjudication on merits under Section 73 of the CGST/TNGST Act, 2017 after the statutory limitation period for filing a regular appeal has completely expired, provided the petitioner agrees to pre-deposit 50% of the disputed tax liability.

Facts

The Revenue issued a scrutiny notice in FORM GST ASMT-10 dated March 8, 2024, to the petitioner for the tax period 2019-2020.
The petitioner filed a reply to the notice, which the assessing authority deemed unsatisfactory.
Consequently, the respondent passed an assessment order dated August 28, 2024, confirming the proposed tax demand.
The petitioner failed to file a statutory appeal against this order, and the limitation period prescribed for filing an appeal expired.
The petitioner subsequently filed a writ petition in the High Court on April 9, 2026, seeking legal relief against the final demand.
During the court proceedings, both parties gave mutual consent to have the matter re-examined and considered afresh by the assessing authority.

Decision

Held, matter remanded: The impugned assessment order is set aside, and the matter is remitted back to the first respondent for a fresh adjudication on merits.
Conditional Remittal Ordered: The fresh adjudication is strictly conditioned upon the petitioner depositing 50% of the disputed tax amount within a mandatory period of 30 days.
Flexible Payment Mode: The petitioner is granted the option to make the pre-deposit either in cash or by utilizing the balance available in their Electronic Cash Ledger.
Opportunity to Re-plead: The petitioner is permitted to treat the impugned assessment order as an addendum to the original notice and file a comprehensive fresh reply backed by all relevant supporting documents.
Natural Justice Mandated: The respondent is directed to pass a fresh order only after affording the petitioner a proper personal hearing in accordance with the law.

Key Takeaways

Discretionary Relief Beyond Limitation: High Courts can exercise extraordinary jurisdiction under Article 226 to grant a taxpayer a fresh hearing on merits even after normal appellate limitation periods have expired, especially when there is mutual consent between the parties.
Pre-Deposit Safeguards Revenue: To balance equity and protect the state’s financial interests when bypassing standard statutory timelines, courts routinely condition an order of remand on a substantial pre-deposit of the disputed tax.
Treatment of Electronic Ledger: The court reaffirms that statutory pre-deposits or conditional payments can be validly discharged using the Electronic Cash Ledger, preserving the taxpayer’s operational liquidity choices.

HIGH COURT OF MADRAS

Sun India Pharma Distributors

Assistant Commissioner of GST & Central Excise^*

C. SARAVANAN, J.

W.P. No.14553 of 2026
W.M.P. Nos. 15800 & 15801 of 2026

APRIL 16, 2026

K.A. Parthasarathy for the Petitioner. Sai Srujan Tayi, Sr. Standing Counsel and Ms. Pooja Jain, Jr. Standing Counsel for the Respondent.

ORDER

1. The Learned Senior Standing Counsel Mr.Sai Srujan Tayi and the Learned Junior Standing Counsel M/s.Pooja Jain, takes notice for the 1^st respondent.

2. With the consent of the learned counsel for the petitioner and the learned Senior and Junior Standing Counsel for the 1^st respondent, this writ petition is being disposed of at the time of admission.

3. In this Writ Petition, the petitioner has challenged the impugned Order dated 28.08.2024 passed by the 1^st respondent for the tax period 2019-2020.

4. By the impugned order, the demand proposed in FORM GST ASMT-10 dated 08.03.2024 was confirmed, as the reply filed by the petitioner to the said notice was deemed unsatisfactory.

5. It is noticed that the statutory limitation for filing an appeal under Section 107 of the respective GST enactments against the impugned order has already expired. The present writ petition has been filed only on 09.04.2026.

6. The learned counsel for the petitioner would submit that the petitioner is willing to deposit 50% of the disputed tax confirmed by the impugned order, and therefore, the learned counsel seeks one opportunity for de novo adjudication. The learned counsel also made an endorsement in the bundle to that effect.

7. The Learned Senior Standing Counsel for the 1^st respondent would submit that he has no objection to the same, subject to the petitioner depositing the aforementioned amount.

8. Recording the above consent of the learned counsel for the petitioner and the Learned Senior Standing Counsel for the 1^st respondent, the case is remitted back to the 1^st respondent to pass a fresh order on merits, subject to the petitioner depositing 50% of the disputed tax, either in cash or from the Petitioner’s Electronic Cash Register, within a period of thirty (30) days from the date of receipt of a copy of this order.

9. Within such time, the petitioner shall also file a reply to the impugned Notice dated 08.03.2024, along with the requisite documents to substantiate their case, treating the impugned Order dated 28.08.2024 as an addendum to the said notice.

10. Subject to the petitioner complying with the above stipulations, the 1^st respondent shall proceed to pass fresh order on merits and in accordance with law, as expeditiously as possible, preferably within a period of three (3) months of such reply / pre-deposit.

11. It is needless to state that, before passing any such order, the petitioner shall be heard.

12. The attachment of the petitioner’s bank account shall also stand automatically raised/vacated, subject to the petitioner complying with the above stipulations.

13. It is made clear that bank attachment shall be lifted, subject to the deposit of 50% of the disputed tax as ordered above and the petitioner not being in arrears of any other amount for any other tax period barring the amount demanded under the impugned order.

14. In case the petitioner fails to comply with any of the stipulations, the 1^st respondent is at liberty to proceed against the petitioner to recover the tax in accordance with law as if this writ petition was dismissed in limine today.

15. This writ petition stands disposed of with the above directions. Consequently, connected miscellaneous petitions are closed. No costs.