Case Law Details
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.
Holding that partners of a partnership firm are personally liable for the firm’s dues, the Court concluded that issuance of the recovery notice in relation to the partner’s bank account under Section 79(1)(c) disclosed no legal infirmity warranting interference under Article 226. Accordingly, the writ petition was dismissed and the connected miscellaneous petitions were closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
A communication issued to the ICICI Bank Limited under Section 79(1) (c) of applicable GST enactments is challenged in this writ petition.
2. Learned counsel for the petitioner submits that the individual bank account of an erstwhile partner of the petitioner firm has been attached pursuant to the impugned notice. He submits further that said partner resigned from the partnership on 04.06.2020. He also submits that prior notice was not issued before attaching the bank account. Relying on Section 83 of applicable GST statutes, learned counsel submits that only the Commissioner is empowered to exercise power under Section 83, whereas the Assistant Commissioner has issued the recovery notice.
3. Mr. K.S.Ramasamy, learned junior standing counsel, accepts notice on behalf of the first respondent. He submits that the writ petition is completely misconceived and that the Assistant Commissioner is empowered to issue a notice under Section 79(1)(c)(i) read with Section 5(3).
4. The writ petition has been filed by the partnership firm and not by the partner. Recovery proceedings pertain to financial year 2019-20. As per the averments in the affidavit, Mr.K.Iyyappan resigned from the partnership on 04.06.2020. Therefore, it appears that he was a partner during the relevant period. The petitioner has proceeded under the misconception that a provisional attachment was effected under Section 83 of applicable GST statutes. On perusal of the impugned communication, it is clear that such communication has been issued under Section 79(1)(c)(i) pursuant to the crystallisation of the tax liability of the partnership firm. Section 79(1)(c) empowers the GST authorities to initiate action against a garnishee. The petitioner has not challenged the order in original making a tax demand on the firm. The partners of a partnership firm are personally liable for the dues of the firm. Since the notice has been issued in relation to the bank account of a partner of the firm, I find no infirmity in the order warranting interference under Article 226.
5. Therefore, this writ petition is dismissed without any order as to costs. Consequently, connected writ miscellaneous petitions are closed.
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