VRAA and Co Vs Assistant Commissioner of GST and Central Excise Guindy division (Madras High Court)
The Madras High Court dismissed a writ petition challenging a communication issued to a bank under Section 79(1)(c) of the applicable GST enactments for recovery of tax dues from the personal bank account of a partner of a partnership firm. The petitioner contended that the bank account of an erstwhile partner had been attached despite his resignation from the partnership on 04.06.2020, that no prior notice had been issued before the attachment, and that only the Commissioner could exercise such powers under Section 83, whereas the notice had been issued by the Assistant Commissioner.
The Court found that the challenge proceeded on a misconception. On examining the impugned communication, it held that the action was not a provisional attachment under Section 83, but a recovery proceeding initiated under Section 79(1)(c)(i) after the firm’s tax liability had already crystallized. The Court accepted the submission that the Assistant Commissioner was empowered to issue the recovery notice under Section 79(1)(c)(i) read with Section 5(3).
The Court noted that the writ petition had been filed by the partnership firm and not by the concerned partner. It further observed that the recovery related to the financial year 2019-20, during which the concerned individual was admittedly a partner, as his resignation took effect only on 04.06.2020. The Court also recorded that the petitioner had not challenged the original tax demand against the firm.
