Bank Account attachment despite payment of GST Arrears: Kerala HC Remands case Back to State Tax Officer

A.M Sainudheen Vs Commercial Tax Officer (Kerala High Court)

Introduction: In a recent ruling by the Kerala High Court, a taxpayer, A.M Sainudheen, challenged the attachment of their bank account by GST officers despite paying arrears. The court’s decision sheds light on the procedural errors made by tax authorities and emphasizes the importance of fair treatment for taxpayers.

Detailed Analysis: The petitioner, A.M Sainudheen, found themselves in a legal battle with GST authorities after receiving a recovery notice for tax arrears amounting to Rs. 88,476 for multiple assessment years. However, Sainudheen had already paid the arrears for certain years and sought a refund of the excess amount paid. Despite raising objections and presenting evidence of payment in their representation, the petitioner’s bank account was attached by GST officers.

The Kerala High Court, upon reviewing the case, found fault with the actions of the tax authorities. The court noted that the petitioner’s representation, outlining the payment of arrears and requesting a refund, was not adequately considered before taking enforcement action. As a result, the court set aside the order to attach the bank account and remanded the matter back to the State Tax Officer for reevaluation.

This ruling underscores the principle of natural justice and procedural fairness in tax matters. It highlights the obligation of tax authorities to thoroughly examine taxpayer representations and evidence before resorting to coercive measures such as bank account attachment. The decision serves as a reminder to tax officials to act prudently and responsibly in enforcing tax laws while respecting the rights of taxpayers.

Conclusion: The Kerala High Court’s decision in the case of A.M Sainudheen vs. Commercial Tax Officer reaffirms the importance of procedural fairness and due diligence in tax enforcement actions. Taxpayers have the right to be heard and their representations must be duly considered before any punitive measures are taken. This ruling sets a precedent for fair treatment of taxpayers and emphasizes the need for responsible conduct by tax authorities to uphold the principles of justice and equity in tax administration.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

Petitioner is an assessee under the provisions of the Central Goods and Services Tax Act/State Goods and Services Tax Act, 2017 having TIN No.3230498362. Show cause notice dated 28.10.2014, Ext.P1, was issued to the petitioner by the 2nd respondent demanding an amount of Rs.57,553/- in respect of the assessment years 2005-06 and 2008­09.

2. The petitioner challenged the said show cause notice before this Court by filing WP(C) No.30070/2014 and this Court vide Ext.P2 judgment and order dated 13.11.2014 disposed of the said writ petition directing the 1^st respondent therein to consider and pass appropriate orders on the representation of the petitioner, in accordance with law, after giving an opportunity of hearing to the petitioner, at the earliest.

3. In pursuance to Ext.P2 judgment and order dated 13.11.2014 in WP(C) No.30070/2014, the representation filed by the petitioner came to be decided vide Ext.P3 order and the competent authority determined the liability and interest at Rs.2,033/- and Rs.1,423/-, respectively.

4. Now, the petitioner has approached this Court in the present writ petition against the recovery notice dated 22.5.2023, Ext.P4, demanding arrears of tax of Rs.88,476/- for the years 2005- 06, 2008-09 and 2012-13. The petitioner has represented against the said notice in Ext.P5 stating that the petitioner has already paid the arrears in respect of the assessment years 2005-06 and 2008-09 and that the excess amount paid by him may be refunded to him. Learned counsel for the petitioner submits that without taking into consideration the contention of the petitioner in Ext.P5, vide Ext.P6 order dated 24.1.2024, the petitioner’s Bank account has been attached.

5. Considering the aforesaid fact, the present writ petition is allowed, the impugned order at Ext.P6 dated 24.1.2024 is set aside and the matter is remanded back to the State Tax Officer, 3^rd respondent herein, to consider the representation of the petitioner in Ext.P5 and pass fresh orders, in accordance with law, expeditiously. The petitioner is directed to appear before the 3^rd respondent on 25.3.2024.

Pending interlocutory application, if any, in the present writ petition stands dismissed.