Failure to Attend Hearing Noticed: Madras HC directs to Pay 5% Pre-deposit from ECR for Final Hearing Opportunity [Read Order]

The Madras High Court recently granted the assessee one more chance to challenge its GST assessment for the FY 2017-18. However, this relief was only granted if the taxpayer deposited ₹15,000,000, or 5% of the contested tax amount, from its Electronic Cash Register (ECR) within a certain time frame.

The petitioner, M/s. Sri Mahalakshmi Construction had earlier approached the High Court seeking rectification of an assessment order dated 22.11.2024 under Section 161 of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017.

Following the Court’s direction on 29.01.2025 to dispose of the rectification application within twelve weeks, the tax authorities issued multiple notices for personal hearing. However, the petitioner failed to appear, citing the unavailability of their Chartered Accountant. Consequently, the application for rectification was rejected by an order dated 19.03.2025.

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Justice C. Saravanan observed that although the petitioner may have a valid case, they had failed to cooperate during the rectification proceedings. The Court said that non-attendance at scheduled hearings, despite multiple opportunities, could not be brushed aside lightly. However, considering the financial stakes and the availability of an appellate remedy even at that stage, the Court invoked a balanced approach.

While admitting the taxpayer's right to appeal under Section 107 of the CGST/TNGST Act, the Court utilized Section 14 of the Limitation Act to protect the petitioner's right to reconsider the matter in accordance with the principles of equity and fairness.

As a result, the petitioner was directed to deposit ₹15,00,000, or roughly 5% of the contested tax amount, within fifteen days of receiving the verdict.

It observed that “Considering the fact that the petitioner had not cooperated with the respondent by coming forward for the personal hearing, which has resulted in the impugned order dated 19.03.2025, this Court is of the view that the interest of the petitioner and the respondent can be balanced by taking note of the amount involved and considering the fact that the petitioner has an avenue to file an appeal even as on date against the assessment order dated 22.11.2024, if the provisions of Section 14 of the Limitation Act, 1963 are applied.”

The Court further clarified that if the petitioner complied with the pre-deposit condition, the respondent authority would be obligated to pass a final order on merits within three months. However, if the petitioner failed to comply, the department would be at liberty to treat the writ petition as dismissed and proceed accordingly.

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