2025 (8) TMI 1336 - HC - GST

Remand ordered with 25% payment within four weeks; unqualified consultant blamed; circular to advise hiring qualified consultants

Chandrasekaran Proprietor Subha Earth Movers Versus Assistant Commissioner (ST), Karur, The Senior Manager and Branch Head Axis Bank, Mullipuram

Chandrasekaran Proprietor Subha Earth Movers Versus Assistant Commissioner (ST), Karur, The Senior Manager and Branch Head Axis Bank, Mullipuram - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether an administrative order passed pursuant to a show-cause notice can be set aside and the matter remitted for fresh consideration where the affected party filed an irrelevant reply due to negligent/incorrect advice from a consultant. 2. Whether the Court may condition remittal on interim deposit/payment of a portion of the disputed tax and prescribe timelines for filing fresh reply and for adjudicatory action by the authority. 3. Whether an attachment/freeze on the taxpayer's bank account, effected in consequence of the impugned order, must be lifted once the impugned order is set aside. 4. Whether the revenue department can be directed to issue a circular advising assessees to engage qualified consultants to avoid recurrence of ill-advice, and the extent to which such administrative guidance is appropriate relief from the Court. ISSUE-WISE DETAILED ANALYSIS Issue 1: Setting aside administrative order and remittal where reply filed was irrelevant owing to consultant's negligence Legal framework: Administrative decisions made after service of a show-cause notice must be based on opportunity to be heard; where a reply is filed but is irrelevant or ineffective, the adequacy of the opportunity and fairness of the proceeding are in issue. The Court has inherent supervisory jurisdiction in writ jurisdiction to examine procedural fairness and to remit for fresh consideration where prejudice is shown. Precedent Treatment: No judicial precedents were relied upon or cited in the judgment; the Court addressed the issue on principle rather than by reference to specific authorities. Interpretation and reasoning: The Court found that the petitioner's reply to the show-cause notice was irrelevant and attributable to ill advice by a consultant. The Court noted recurrent instances where unqualified consultants give poor advice, leading to parties being unable to present proper replies supported by documents. Given that the ineffective reply resulted from negligence of the consultant and caused prejudice (leading to an adverse order and business standstill), the Court considered it appropriate to afford another opportunity by setting aside the impugned order and remitting the matter for fresh consideration. Ratio vs. Obiter: Ratio - where an affected party files an ineffective/irrelevant reply due to negligent advice, the Court may set aside the resultant order and remit the matter for fresh consideration to secure a fair opportunity to be heard. Obiter - observations about the widespread practice of unqualified consultants and its social/economic consequences, though grounded in fact, are ancillary to the remedial decision. Conclusion: The impugned order was set aside and the matter remitted for fresh consideration to cure procedural unfairness caused by the irrelevant reply attributable to consultant negligence. Issue 2: Conditioning remittal on payment of a portion of disputed tax and imposition of timelines for further proceedings Legal framework: Courts exercising equitable supervisory jurisdiction in tax matters may impose conditions when granting interim relief or remitting matters, including security or partial payments, to balance the rights of the revenue and the taxpayer and to prevent misuse of the remedy. Courts may also prescribe reasonable timelines for filing objections and for the authority to decide so as to ensure expeditious adjudication. Precedent Treatment: No case law was cited; the Court acted on established supervisory principles and practical equities between revenue protection and preservation of business continuity. Interpretation and reasoning: Recognising the respondent's legitimate interest in revenue protection and the petitioner's plea of business prejudice and employment impact, the Court accepted a consensual proposal (and petitioner's willingness) to pay 25% of the disputed tax. The Court held it reasonable to condition remittal on payment of that amount within a fixed period. The Court also imposed schedules: three weeks from payment to file reply/objection, and the authority to give 14 days' clear notice fixing personal hearing before passing orders expeditiously. These directions were framed to ensure both procedural fairness and protection of revenue interest while preventing undue delay. Ratio vs. Obiter: Ratio - the Court may remit an adjudicatory matter on condition of interim payment of a proportionate amount of disputed tax and may stipulate timelines for compliance and fresh adjudication to protect both parties' interests. Obiter - the precise percentage (25%) is case-specific and reflects agreement and the Court's balancing exercise, not a general rule binding in other cases. Conclusion: Remittal was ordered subject to payment of 25% of disputed tax within four weeks; timelines for filing fresh reply (three weeks after payment) and for the authority to issue 14 days' notice and decide expeditiously were mandated. Issue 3: Lifting of bank attachment/de-freezing accounts where impugned order set aside Legal framework: An attachment or freeze that is founded on an order that is set aside loses the operative legal basis for restraint; courts can direct immediate release where the underlying order has been vacated, subject to any conditions imposed by the Court to protect revenue or secure compliance. Precedent Treatment: No precedents were cited in the judgment; the Court applied basic legal principle that an order dependent on a set-aside adjudication cannot subsist independently. Interpretation and reasoning: Since the Court set aside the impugned order, it held that the bank attachment could not lawfully persist. To restore the petitioner's ability to continue business and to alleviate hardship (including unemployment of workers), the Court directed the authority to instruct the bank to release the attachment and de-freeze the account immediately upon production of a copy of the order. Ratio vs. Obiter: Ratio - where an order giving rise to an attachment is set aside, the consequent attachment may be ordered lifted forthwith. Obiter - the policy considerations about business continuity and worker unemployment underpinning the remedial urgency are contextual rather than binding principles. Conclusion: The attachment on the bank account was to be lifted immediately upon production of the Court's order; the bank instructed to release the attachment and de-freeze the account. Issue 4: Direction to department to issue circular advising engagement of qualified consultants Legal framework: Courts can issue directions to administrative bodies to adopt procedural or policy measures within the scope of their statutory powers where such directions are necessary to prevent recurring injustice or to improve administrative fairness; however, such directions must respect separation of powers and be practicable. Precedent Treatment: No authority was cited. The Court's direction arises from observed recurrent administrative problems rather than adjudication of a statutory duty in the particular case. Interpretation and reasoning: The Court observed recurring instances where unqualified consultants give erroneous advice causing prejudice to assessees and burdening adjudicatory processes. To mitigate recurrence, the Court thought it appropriate to direct the revenue department to issue a note/circular advising assessees to engage qualified consultants and cautioning against relying on unqualified advisors. The Court characterised this as an administrative remedial measure to be taken by the department. Ratio vs. Obiter: Obiter leaning toward practical guidance - the direction is administrative and corrective rather than a dispositive legal principle; it addresses systemic concerns observed by the Court but is not premised on a statutory mandate adjudicated in the case. Conclusion: The Court directed the department to issue a circular advising assessees to engage qualified consultants to prevent repetition of ill-advice; this direction is administrative and intended to reduce procedural prejudice in future cases. Net Disposition and Practical Directions (expressing the operative conclusions) The Court set aside the impugned order and remitted the matter for fresh consideration on condition of payment of 25% of the disputed tax within four weeks; the petitioner to file reply/objection within three weeks of payment; the authority to issue 14 days' clear notice fixing a personal hearing and then pass orders on merits expeditiously; the bank attachment to be lifted immediately upon production of the order; and the department directed to issue a circular advising engagement of qualified consultants. No costs were awarded.