Case Law Details
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.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This Writ Petition is disposed of at the time of admission with the consent of the learned counsel for the petitioner, learned Additional Government Pleader for the first respondent and learned Standing Counsel for the second respondent.
2. The petitioner has approached this Court against the impugned recovery notice in GST DRC 13, dated 09.06.2023.
3. The specific case of the petitioner is that the petitioner has closed his business as early as on January 2023 and therefore, he was unaware of the notice that preceded the impugned Assessment Order.
4. It is submitted that the petitioner has also not been served with the Assessment Order. However, the petitioner’s account with the second respondent/Bank has been freezed.
5. The learned counsel for the petitioner submits that the petitioner is willing to deposit the entire tax due, without interest and penalty and the petitioner may also be given an opportunity to file a reply to the notice.
6. Having considering the arguments advanced by the learned counsel for the petitioner, learned Additional Government Pleader for the first respondent and learned Standing Counsel for the second respondent, this Court is inclined to direct the second respondent to de-freeze the petitioner’s account, subject to the petitioner depositing entire tax due, without interest and penalty within a period of thirty (30) days from the date of receipt of a copy of this order.
7. In case sufficient amount of balance is lying in the petitioner’s account, the second respondent shall transfer the amount to the credit of the first respondent towards deposit, without prejudice the rights of the petitioner in the de nova proceedings.
8. Subject to the above stipulations, the petitioner is permitted to file a reply to the Notice in DRC 01, dated 25.11.2024 by treating the impugned Assessment Order, dated 17.02.2025 as addendum to the same.
9. In case there is a compliance to the above stipulations, the first respondent shall proceed to pass fresh orders on merits and in accordance with law as expeditiously as possible preferably within a period of three (3) months thereafter.
10. In case the petitioner fails to comply with the above stipulations, the first respondent is at liberty to proceed against the petitioner as if this Writ Petition was dismissed in limine today
11. This Writ Petition is disposed of, with the above observations. No costs.
Consequently, connected miscellaneous petitions are closed.
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