Case Title: Saravana Enterprises v. State Tax Officer (Inspection-III), Virudhunagar
Court: High Court of Madras
Petition No.: W.P. (MD) Nos. 17811 to 17818 of 2024
Category of Dispute: Assessment Order passed under DRC-01 without reply, Challenge to Circular
Date of Judgement: 30 July 2024
Relevant Sections: Section 73 of the CGST Act, 2017; Rule 142 of the CGST Rules, 2017
Facts of the Case
[Para 2-5]
- The petitioner challenged assessment orders for FY 2017-18 to 2023-24 and impugned TNGST Circular Nos. 13/2022 and 11/2023.
- Business premises were inspected in October 2023, and statements recorded on 30.10.2023.
- Show cause notices in Form DRC-01 were issued but not replied to. Orders were passed based on this.
- Petitioner alleged that the entire proceeding was void due to procedural violations and challenged the validity of circulars used.
Questions in Consideration
[Para 4, 5, 8]
- Whether the assessment orders passed under Section 73 based on DRC-01 without reply from the assessee are valid.
- Whether the TNGST Circulars No.13/2022 and 11/2023 are contrary to the GST enactments.
- Whether petitioner’s non-participation in adjudication justifies writ remedy.
Observation of Court
[Para 8–11]
- The petitioner had neglected to participate in the adjudication despite proper service of DRC-01 notices.
- Court held that there was no bar under the Act for inspection or recording of statements, and the circulars were consistent with the law.
- Cited M/s. Rasathe Garments v. State Tax Officer (Inspection), Tirunelveli, where similar issues were upheld.
- However, considering the petitioner’s lapse, the court granted one more opportunity to respond, subject to 10% pre-deposit of disputed tax.
Judgement of the Court
[Para 10–12]
- Assessment orders for all years were quashed temporarily and treated as addenda to DRC-01 notices.
- Petitioner to deposit 10% of the disputed tax within 8 weeks and file reply within 12 weeks.
- Final orders to be passed within two months thereafter.
- If conditions not complied with, writ petitions shall stand dismissed automatically.
Between Fine Lines
- GST notices in DRC-01 require a timely response; ignoring them can cost dearly.
- Circulars permitting inspections and issuance of DRC-01 are valid and binding.
- Courts may allow a second chance but attach strict conditions.
- Merely challenging procedural lapses is not enough without demonstrating prejudice.
- Assessment orders without response are not automatically void if due process is followed.
Summary of Referred Cases
| Name of Case | Citation | Summary | Verdict |
| M/s. Rasathe Garments v. STO (Inspn.) | W.P. (MD) Nos. 25548 & 26389 of 2023 | Validated issuance of DRC-01 post inspection and held circulars to be lawful | Against the Assessee |
