Madras HC: GST Department to De-Freeze Bank Account on Tax Instalment Payment

N.S. Rathinam And Sons PVT Ltd Vs Commissioner of GST And Central Excise (Madras High Court)

Interim relief of de-freezing the bank account after depositing the first installment of disputed tax

The Hon’ble Madras High Court in M/s. N.S. Rathinam and Sons Pvt. Ltd. v. the Commissioner of CGST & CE [WP(MD) No.18576 of 2023 dated August 01, 2023] granted interim relief of de-freezing the assessee’s bank account on the payment of the first installment of the total tax liability.

Facts:

M/s. N.S. Rathinam and Sons Pvt. Ltd. (“the Petitioner”) had pending GST liability.

The Revenue Department (“the Respondent”) passed an order (“the Original Order”) demanding the GST along with interest and penalty.

The Petitioner contended that he is liable to pay the tax and the interest portion quantified by the Respondent. However, the Respondent has issued orders to freeze the Petitioner’s bank account and cancelled the GST registration.

Further, the Respondent passed another order (“the Impugned Order”) for freezing the bank account of the Petitioner and further ordered the cancellation of the Petitioner’s GST registration.   

Aggrieved by the Impugned Order, the Appellant filed a writ before the Hon’ble Madras High Court.

Issue:

Whether an interim relief of de-freezing the bank account be granted when Petitioner contends his tax liability?

Held:

The Hon’ble Madras High Court in WP(MD) No. 18576 of 2023 held as under: –

• Held that, pending final disposal of the case, the Petitioner must deposit the first installment of the GST as divided into four equal installments within one week of receipt of the order.
• Directed, the Petitioner to pay the entire tax portion in four equal installments and the interest that will be considered after the payment of the tax liability.
• Further directed, the Petitioner to pay the first installment within one week from the date of receipt of a copy of the Court’s Order.
• Further held that, the Respondent must de-freeze the bank account of the Petitioner after payment of the first installment of the GST.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

This Writ petition coming up for orders on this day, upon perusing the petition and the affidavit filed in support thereof and upon hearing the arguments of Mr. S. KRISHNANAND, Advocate for the petitioner and of Mr. R. NANDAKUMAR, Senior Standing Counsel assisted by Mr. S. RAGAVENTHRE, Junior Standing counsel on behalf of the Respondents, the Court made the following order:-

This writ petition is filed challenging the assessment order and the consequential imposition of penalty and interest.

2. The contention of the petitioner is that the petitioner is liable to pay the tax and the interest portion which have been quantified by the respondents. However, the respondents have issued orders to freeze the petitioner’s bank account and also cancelled the GST registration. The case needs elaborate consideration.

3. Therefore, the petitioner is directed to pay the entire tax portion in four equal installments. As far as the interest portion is concerned, that will be considered after the payment of the tax liability.

4. The petitioner is directed to pay the first installment within a period of one week from the date of receipt of a copy of this order. On such payment the respondents are directed to de-freeze the petitioner’s bank account.

5. The respondents are directed to file counter affidavit.

6. Post the case on 01.09.2023.

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