M.Velusamy Vs State Tax Officer
Date: July 2, 2025
Subject Matter
Business Closed: De-Freezing of Bank Account Ordered. Taxpayer Allowed to Challenge GST Demand by Depositing Tax Due
Summary
This writ petition was filed by a petitioner challenging a recovery notice in Form GST DRC 13, dated June 9, 2023, and the freezing of his bank account. The petitioner's specific case is that he closed his business in January 2023 and was therefore unaware of the preceding notice and the assessment order (dated February 17, 2025).
The petitioner's counsel stated that the petitioner is willing to deposit the entire tax due, without interest and penalty, and requested an opportunity to file a reply to the show cause notice. The counsels for the respondents did not object to this approach.
The court disposed of the writ petition with the following directions:
The second respondent (Bank) is directed to de-freeze the petitioner's account, on the condition that the petitioner deposits the entire tax due (without interest and penalty) within 30 days from the receipt of the order.
If there is a sufficient balance in the petitioner's account, the bank is to transfer the amount to the credit of the first respondent (tax authority) as a deposit.
Subject to this deposit, the petitioner is permitted to file a reply to the notice in Form GST DRC 01, dated November 25, 2024, by treating the impugned assessment order (dated February 17, 2025) as an addendum to it.
If the petitioner complies with these stipulations, the first respondent is directed to pass a fresh order on the merits of the case, preferably within three months.
If the petitioner fails to comply, the first respondent is at liberty to proceed with recovery as if the writ petition had been dismissed.
The writ petition was disposed of with these observations, and connected miscellaneous petitions were closed.
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.