The case of Srikals Graphics Private Ltd Vs Assistant Commissioner (ST) underlines the critical issue of providing due notice to businesses before taking drastic measures such as freezing bank accounts. It particularly focuses on the role of communication and due process in Tamil Nadu Value Added Tax (TNVAT) proceedings. This analysis takes a closer look at the proceedings and implications of this case.
Analysis: Srikals Graphics Pvt. Ltd., despite paying their Commercial Sales Tax and TNVAT diligently, found their bank account frozen over alleged dues. The company claimed they received no prior notice or communication about these dues or the impending freezing of their account, only learning of the situation when the action was already implemented. The respondents alleged a notice was issued, but it appeared to have been returned. The court, considering these circumstances, felt it fair to grant the petitioner another opportunity, provided they settle a part of the alleged dues. This case underscores the importance of clear, timely communication and proper notice delivery in tax proceedings.
Conclusion: The judgement of the Madras High Court in this case emphasizes the necessity of due process and clear communication, particularly when severe measures like freezing bank accounts are being taken. It provides a fresh chance for the petitioner to settle the alleged dues and presents an opportunity to present evidence in their defense. This decision sets a precedent for similar cases and serves as a reminder for tax authorities to ensure proper procedure and communication.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This Writ Petition has been filed for issuance of Writ of Certiorarified Mandamus to call for the records of the impugned notice No.RC 152/2022/A3, dated 06.04.2022 issued by the 1st respondent herein and quash the same and consequently direct the 2nd respondent to defreeze the bank account of the petitioner in Bank Account No.030702000001221, Indian Overseas Bank, Saidapet Branch, Chennai.
2. The main grievance of the Writ Petitioner is that the petitioner is paying their Commercial Sales Tax and Tamil Nadu Value Added Tax right from the year 2008-2009 without any default. However, in view of change of office from Ekkattuthangal to Guindy, the petitioner was not put on notice about any communication from the respondents and to their shock, on 06.04.2022, the petitioner came to know that their bank account has been freezed for non-payment of Rs.16,35,917/-. It is the case of Writ Petitioner is that on coming to know about the alleged amount due to the department, he has already paid a sum of Rs.2,03,000/- by way of demand draft in favour of 1st respondent. According to the Writ Petitioner, they were never put on any notice about any proceedings or impugned notice and for the first time, the petitioner came to know about the same only when their bank account was freezed.
3. E.Ranganayaki, learned Special Government Pleader appearing for respondents submitted that notice has been issued on 08.03.2022 and only thereafter, further proceedings were taken to freeze the bank account. However, the petitioner vehemently denied the receipt of any such notice. While so, the learned counsel for respondents would fairly admit that the said notice appears to have been returned.
4. Heard and considered rival submissions of learned counsel on either side and perused the records.
5. Considering the above facts and circumstances, this Court feels that it would be fair and equitable to give one more opportunity to the Writ Petitioner subject to being put on terms. Accordingly, this Writ Petition is allowed on condition that the petitioner shall pay a sum of Rs.6,00,000/-(Rupees six lakhs only) within a period of six weeks from the date of receipt of copy of this order. On such payment, the respondents shall ensure that the bank account of Writ Petitioner in A/c. No. 030702000001221, Indian Overseas Bank, Saidapet Branch, Chennai shall be defreezed with immediate effect. Thereafter, it is needless to state that fresh enquiry shall be conducted by the 1st respondent and the petitioner shall be given opportunity of his personal appearance and also for providing documentary and oral evidence in respect of the alleged arrears due.
6. With the above direction, this Writ Petition is allowed. No costs. Consequently, connected Writ Miscellaneous Petitions are closed.