Alagappan Palaniappan Vs Deputy State Tax Officer (Madras High Court)
Madras High Court has quashed an order issued by the Deputy State Tax Officer that froze the bank account of M/s. Vetri Medicals and demanded Rs. 11.97 lakhs for alleged wrongful Input Tax Credit (ITC) claims for the period 2017-2018. The court’s decision was primarily based on the finding that the petitioner, Alagappan Palaniappan, proprietor of Vetri Medicals, was not adequately served with a show cause notice before the impugned order was passed.
The petitioner, a registered GST taxpayer, claims to have been regularly complying with GST regulations. However, in the third week of March 2025, the petitioner was informed by his bankers, Central Bank of India, that his business current account had been frozen due to an order dated April 29, 2024, issued by the Deputy State Tax Officer. This order demanded a sum of Rs. 11,97,000/- on account of wrongful ITC claims.
According to the petitioner, the contentious order was passed without prior intimation or a show cause notice being served directly to him. He contended that the notice was merely uploaded onto the GST portal, of which he was unaware. The levy of interest and penalty, coupled with the bank account freeze, severely disrupted his business operations, compelling him to file the writ petition.
