Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(Mad) 44271

IN THE HIGH COURT OF JUDICATURE AT MADRAS
D. Bharatha Chakravarthy, J
M. Ilayaraja – Appellant
Versus
State Tax Officer – Respondent
W.M.P.(MD)Nos.9948 & 9949 of 2026

Advocates:
For the Appellants/Petitioners: S. Karunakar
For the Respondents: R. Suresh Kumar

An assessment order must be supported by cogent, reasoned findings specifically addressing the assessee's contentions, and penalty imposition requires a distinct consideration of mens rea, otherwise, the order is liable to be set aside for lack of transparency and procedural fairness.

Headnote:The petitioner challenged an assessment order under Section 16 of the Tamil Nadu Value Added Tax Act, 2006, alleging a lack of specific reasoning for the rejection of claims and an arbitrary imposition of penalty. The Court observed that the authority failed to expressly answer the contentions raised after the matter was remanded in the first round of litigation, and that the element of mens rea for penalty was not duly considered. The Court found that failing to provide reasoned findings on specific stands taken by the assessee constitutes a procedural infirmity. The main issues were whether the assessment order was sustainable despite lacking reasoned responses to the petitioner's contentions and whether the penalty was imposed automatically. The court held that the authorities have a duty to spell out reasons when rejecting specific claims, especially following a prior remand, and that penalty imposition requires a consideration of mens rea. The requirements of natural justice necessitate that the assessee be given a fair opportunity to present their case with proper consideration by the assessing authority. The final result is that the writ petition is allowed, the impugned order is set aside, and the matter is remanded back to the respondent for fresh consideration subject to the condition of depositing 25% of the disputed tax amount.

Table of Content
1. assessment orders require specific reasoning to justify claims and address contentions. (Para 1 , 2 , 3)
2. failure to consider specific stands and mens rea requires setting aside assessment orders. (Para 4 , 5 , 6)
3. conditional remand for fresh assessment following set aside of orders. (Para 7)

O R D E R

This writ petition is filed challenging the impugned order dated

02.02.2026. The same is an order of assessment passed under Section 16 of the TNVAT Act.

2.Mr.S.Karunakar, the learned counsel appearing on behalf of the petitioner would submit that firstly there is no specific reasons which were given for rejecting the case of the petitioner and the assessment order is passed generally by saying that the petitioner's case is not accepted. Secondly, even with reference to penalty, it proceeds as if the imposition of penalty is automatic.

3.The learned Additional Government Pleader appearing on behalf of the respondent would submit that when the petitioner has submitted the document, after going through the same, the finding of the authority is recorded. The petitioner did not prefer an appeal in time and as such left the order to become final. Further the order itself is passed pursuant to the earlier remand by the Appellate Authority.

4.I have considered the rival submissions made on either side and perused the material records of the case.

5.It is true that this is the second round of litigation as earlier the Appellate Authority had remanded the matter back to the assessing authority. After the remand, it can be seen that the petitioner has filed a reply and also filed documents. When specific stands are taken, it is expected of the assessment authority to consider the same and spell out the reasons. In this case, the reason is mentioned that as if that after going through the documents, the contentions are not acceptable. The various grounds taken are not answered expressly.

6.This apart, even with reference to penalty, it is submitted by the learned counsel that the element of mensrea have to be looked into with reference to the imposition of penalty under VAT Act. For all the above reasons, I am of the view that an opportunity can be granted to the petitioner. However, on condition to deposit 25% of the disputed tax amount.

7.In view thereof, this writ petition is allowed on the following terms:

(i)Within a period of four weeks from the date of receipt of web copy of the order, the petitioner shall deposit 25% of the disputed tax amount with the respondent, without waiting for a certified copy of the order.

(ii)Upon such deposit, the impugned order dated 02.02.2026 shall stand set aside, and the matter shall stand remanded back to the file of the respondent.

(iii)The assessee shall appear before the respondent without fail and submit their reply and documents in support of their claim, and it is for the respondent to consider the matter afresh and pass orders in accordance with law.

(iv)Since the impugned order of assessment is set aside, any attachment of the bank account made pursuant to the impugned order shall raised.

(v)No costs. Consequently, connected miscellaneous petition is closed.

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2026 Supreme(Online)(Mad) 44271

IN THE HIGH COURT OF JUDICATURE AT MADRASD. Bharatha Chakravarthy, JM. Ilayaraja – AppellantVersusState Tax Officer – RespondentW.M.P.(MD)Nos.9948 & 9949 of 2026

An assessment order must be supported by cogent, reasoned findings specifically addressing the assessee's contentions, and penalty imposition requires a distinct consideration of mens rea, otherwise, the order is liable to be set aside for lack of transparency and procedural fairness.

IN THE HIGH COURT OF JUDICATURE AT MADRAS
D. Bharatha Chakravarthy, J
M. Ilayaraja – Appellant
Versus
State Tax Officer – Respondent
W.M.P.(MD)Nos.9948 & 9949 of 2026