Madras High Court Quashes GST Notice To Queen Mira School, Says Assessment Must Precede Recovery

The Madras High Court on 24 September quashed a show cause notice issued to Queen Mira International School, while granting the department liberty to initiate fresh proceedings in accordance with law.

Justice C. Saravanan held that the GST authorities must first assess the tax liability of an unregistered person under the prescribed statutory mechanism before proceeding against such person for tax recovery. The Bench observed:

“Under the GST enactment, the Department has to first invoke the machinery under Section 63 in the case of an unregistered person like the petitioner.”

The school approached the Court challenging the show cause notice dated 27 August 2026, issued under Section 74 of the GST enactments. The notice proposed recovery of tax on the ground that the school had not obtained registration and had not paid tax on the services provided by it.

Appearing for the school, Senior Counsel Isaac Mohanlal submitted that the institution was exempt from GST under Serial No. 66 of Notification No. 12/2017-Central Tax (Rate), as amended by Notification No. 2/2018-Central Tax (Rate). He argued that there were no foundational facts for issuing the notice as the school was entitled to the exemption.

The Court held that whether the school was entitled to the claimed exemption was a matter to be adjudicated by the GST authorities. However, it noted that the GST enactment contains a specific mechanism for assessing an unregistered person who is alleged to be liable to pay tax.

Referring to the prescribed mechanism, it noted that the proper officer may assess the tax liability of a person who fails to obtain registration despite being liable to do so, to the best of his judgment for the relevant tax periods.

Further, the Bench relied on its recent decision in MRF Limited v. Additional Director, DGGI Delhi Zonal Unit, reported in (2026) 155 GSTR 91, which also dealt with the requirement to follow the prescribed assessment procedure.

It quashed the show cause notice and granted the department liberty to issue an ASMT-14 notice under the prescribed assessment mechanism. It clarified that the school would be entitled to raise all available contentions, including its claim of exemption under the relevant notification.

Accordingly, the High Court disposed of the writ petition with no order as to costs.

For the Petitioner: Senior Counsel Isaac Mohanlal, for M/s Isaac Chambers

For Respondent No. 1: Senior Panel Counsel C. Rajagopal

For Respondent No. 2: Special Government Pleader R. Parthiban

For Respondent Nos. 3 to 5: Senior Standing Counsel R. Gowrishankar