Bank attachment order set aside due to natural justice violation in GST proceedings

The HC set aside a bank attachment order and remanded the matter for fresh consideration after finding violation of natural justice principles. The petitioner, who had shifted business location and failed to update authorized representative details under GST regime, was unaware of show cause notices served on their previous auditor. The court held the department at fault for the petitioner's lack of awareness of proceedings and inability to respond. Relief was granted subject to payment of 7.5% of disputed tax within four weeks. The petition was allowed by way of remand for fresh consideration by the first respondent.

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Issues:
Challenge to Order-in-Original and bank attachment notice - violation of principles of natural justice.

Analysis:
The Writ Petitions challenged the Order-in-Original dated 23.09.2022 passed by the first respondent and the consequential bank attachment notice dated 20.04.2024, seeking to quash them. The petitioner, represented by M/s. S.P. Sri Harini, argued that they were unaware of the impugned order due to delayed receipt and lack of prior notices, leading to a violation of natural justice principles. On the other hand, Mr. T. Ramesh Kutty, Senior Standing Counsel for the first respondent, defended the order stating that the show cause notice was served on the petitioner's Auditor, who failed to respond, justifying the subsequent actions taken. The petitioner contended that the Auditor was only authorized for Service Tax matters, not GST issues, hence the lack of awareness and inability to respond.

The petitioner further explained that after transitioning to the GST regime and changing business premises, they had duly informed the authorities. However, the impugned order was sent to the old address, causing the petitioner to remain unaware of the proceedings. The petitioner expressed readiness to deposit 7.5% of the disputed tax if the order was set aside for reconsideration. The Senior Standing Counsel proposed a 50% deposit if the matter was remanded.

Upon review, the Court found that the petitioner's lack of authorization for GST matters and the fault of the respondent-Department in sending notices to the old address resulted in the petitioner's unawareness and inability to respond. Consequently, the Court set aside the Order-in-Original and remanded the matter for fresh consideration, subject to the petitioner depositing 7.5% of the disputed tax within four weeks. The petitioner was directed to file a reply within two weeks of payment, and the respondent was instructed to grant a personal hearing and pass necessary orders. Additionally, the petitioner was to approach the bank with proof of payment for de-freezing the account.

In conclusion, both Writ Petitions were allowed with the specified directions, and no costs were awarded. Connected Miscellaneous Petitions were closed as a result of the judgment.

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