M.Velusamy Vs State Tax Officer (Madras High Court)
In a recent ruling, the Madras High Court has allowed M. Velusamy to contest a GST recovery notice (DRC 13, dated June 9, 2023), despite a previous assessment order. The petitioner argued that his business ceased operations in January 2023, leading to his unawareness of the preceding notices and the assessment order itself. He also stated that his bank account had been frozen.
The taxpayer expressed willingness to deposit the full tax amount but sought relief from interest and penalties, along with an opportunity to respond to the original notice. The court, considering these submissions, directed the second respondent (bank) to defreeze the petitioner’s account, contingent on the petitioner depositing the entire tax due (excluding interest and penalty) within 30 days.
This deposit, if sufficient, will be transferred to the first respondent’s (State Tax Officer) credit, without prejudice to the petitioner’s rights in subsequent proceedings. Subject to this compliance, the petitioner is permitted to file a reply to the initial notice (DRC 01, dated November 25, 2024), treating the impugned assessment order (dated February 17, 2025) as an addendum. The first respondent is then directed to pass a fresh order expeditiously, preferably within three months. The court cautioned that non-compliance with these stipulations would result in the dismissal of the writ petition. This decision highlights the court’s consideration for due process, even in cases of apparent non-compliance, when a taxpayer demonstrates a willingness to address the core tax liability.
