Case Law Details
Pradeep Kumar Siddha Vs Union of India & Ors. (Bombay High Court)
Bombay High Court recently delivered a judgment in the case of Pradeep Kumar Siddha vs. Union of India & Ors., addressing the issue of a bank account lien imposed by tax authorities. The petitioner’s Axis Bank account had been attached, and Rs. 62,32,400 was appropriated towards alleged tax dues without proper adherence to the principles of natural justice. The High Court had previously ordered the respondents to deposit this amount with the court, which was then re-credited to the petitioner’s account. Subsequently, an Order-in-Original was passed, imposing a lien on the same account for a total demanded dues amount of Rs. 1,49,87,924.
The petitioner filed the current writ petition, arguing that the lien prevented them from depositing 10% of the tax demand (Rs. 8,76,564), a mandatory pre-deposit for filing an appeal against the Order-in-Original. The petitioner also challenged the legality of the lien itself. The respondents argued the petition was frivolous, citing the availability of an alternate remedy (appeal) and alleging serious issues concerning the petitioner’s status, including involvement in issuing fake invoices for bogus ITC credit under GST laws.
The High Court acknowledged the respondents’ concerns about the petitioner’s conduct but also recognized the petitioner’s right to appeal the Order-in-Original. Balancing these competing interests, the court directed the Axis Bank branch to transfer the entire balance in the petitioner’s account to the Registrar of the High Court within two weeks. Upon receiving the funds, the Registrar was directed to transfer Rs. 8,76,564 to the 2nd respondent (tax authority). This amount would be considered the pre-deposit, enabling the petitioner to file an appeal against the Order-in-Original within four weeks of the transfer. The court clarified that if online filing was not feasible, the appellate authority should accept a physical appeal.
The remaining funds, after the pre-deposit transfer, would be invested by the Registrar in a fixed deposit with a nationalized bank. This amount would be subject to the outcome of the appeal. The High Court specifically directed the appellate authority to decide the appeal on merits, without considering any limitation issues, as the original writ petition had been filed within the limitation period for filing an appeal. The court emphasized that its observations were prima facie and should not influence the appellate authority’s decision. The rule was disposed of in these terms, with no order as to costs.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Heard learned counsel for the parties.
2. The rule is made returnable immediately at the request of and with the consent of the learned counsel for the parties.
3. The records in this matter show that the respondents attached and appropriated the amount of Rs.62,32,400/- from the petitioner’s Axis Bank, Bhayander Branch Account No.918020073067221, towards tax dues. This was done without minimum compliance with the principles of natural justice and fair play.
4. Therefore, by its order dated 18 July 2022 in Writ Petition No.8298 of 2022, this Court directed the respondents to deposit this amount in this Court. Upon deposit, this amount was directed to be re-credited to the petitioner’s bank account above. After that, an Order-in-Original dated 25 May 2023 was passed, under which a lien was ordered on the petitioner’s bank account above against the demanded dues of Rs.1,49,87,924/-.
5. The petitioner instituted this petition on 12 June 2023, within the limitation period prescribed for filing an appeal against the Order-in-Original dated 25 May 2023. Mr. Pathak argues that because the Order-in-Original marks a lien, the petitioner is precluded from depositing 10% of the tax demand of Rs.87,65,646/-, a prerequisite for instituting an appeal. He also contends that the marking of the lien is illegal and warrants interference.
6. Mishra submits that this petition is frivolous, and since the petitioner has an alternate remedy of an appeal against the order dated 25 May 2023, the same should not be entertained. Regarding marking lien, Mr. Mishra refers to several circumstances, including those reported in Order-in-Original. He points out that there are serious issues about the petitioner’s status, and there is material to show that the petitioner was issuing fake invoices to facilitate bogus ITC credit under GST laws.
7. We have considered the rival contentions and think that a workable order would be in the interests of justice so that neither party is unduly prejudiced.
8. Having regard to the respondent’s allegations and findings given in the Order-in-Original dated 25 May 2023, we are satisfied that this is not a case where the petitioner should be allowed to deal with any of the amounts in the petitioner’s Axis Bank Account No.918020073067221 at Bhayander Branch. At the same time, since the petitioner has a right to question the Order-in-Original dated 25 May 2023, it will not be proper if the petitioner is deprived of this valuable right on account of his not being able to arrange the pre-deposit amount of Rs.8,76,564/-. Without depositing this amount, the petitioner’s appeal against the order dated 25 May 2023 would not be entertained.
9. Given the findings in the order dated 25 May 2023 and the statements in the affidavit-in-reply filed on behalf of the respondents, the interests of the respondent revenue must be protected. However, such protection must be proportionate and cannot result in the petitioner being deprived of the valuable right to appeal the order.
10. Therefore, by balancing the competing interests, we direct the Axis Bank, Bhayander Branch, to transfer the entire amount in the petitioner’s bank account to the Registrar of this Court within two weeks of the parties producing an authenticated copy of this order. In fact we had adjourned the matter at Mr Pathak’s request to enable him to obtain instructions. Mr Pathak, on instructions, submitted that it would be better if the Court made an equitable order.
Once the Bank deposits this amount in the Court, the Registrar of this Court must transfer an amount of Rs.8,76,564/- to the 2nd respondent within two weeks of such deposit being made. This transferred amount will then serve as a pre-deposit based, upon which the petitioner would be entitled to appeal against the order dated 25 May 2023. The appeal must be filed within four weeks of this Court’s transfer of the above amount to the 2nd respondent. In the peculiar facts of this case, if online filing of the appeal is not possible, then the appellate authority must accept the appeal in physical format. Should an appeal be instituted, the appellate authority will consider all parties’ contentions. The observations in this order are only prima facie, and they need not influence the appellate authority in deciding the appeal on merits and following the law.
11. The Registrar must invest the balance in a suitable fixed deposit with a nationalised bank. This amount will be subject to the Orders-in-Appeal against the order dated 25 May 2023.
12. Suppose the appeal is instituted within the period indicated above. In that case, the appellate authority must dispose of the appeal on merits without adverting to the limitation issue because, as pointed out earlier, the petitioner instituted this petition within the limitation period or instituting the appeals.
13. The rule is disposed of in the above terms without any cost orders.
14. All concerned to act on the authenticated copy of this order.
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