Appellate remedy against time barred tax demands and attachment of overdraft accounts: conditional appeal allowed; OD attachment restrained.

Petitioner permitted conditional remedy against a time-barred tax demand: the court allowed filing before the Appellate Authority within 30 days provided the petitioner deposits 50% of the disputed tax in two instalments within two months; on deposit the appeal must be decided on merits without limitation reference, non-compliance permits dismissal and revenue action. Separately, the court held that sums in an overdraft account represent bank borrowings and are not ordinarily attachable by tax authorities; attachment of the OD account was restrained while preserving the revenue's right to pursue movable or immovable assets offered as security, subject to the bank's rights and appeal outcome.

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Issues: (i) Whether the petitioner should be granted liberty to prefer an appeal against the Order-in-Original dated 26.07.2024 before the Appellate Authority despite expiry of the statutory period and on what terms; (ii) Whether the overdraft bank account of the petitioner maintained with the second respondent can be attached by the tax authority.

Issue (i): Whether the petitioner should be permitted to file an appeal against the Order-in-Original dated 26.07.2024 and on what conditions.

Analysis: The Court considered the petitioner's assertion that it became aware of the impugned order only upon attachment of its bank account and the respondents' submissions that the demand was confirmed after considering the petitioner's reply and that the dispute arose from mismatches in GSTR-1 and GSTR-3B. The Court followed its consistent approach in similar matters to allow appellate remedy subject to conditional compliance to balance the interest of revenue and the assessee's right to appeal.

Conclusion: The petitioner is granted liberty to prefer an appeal before the Appellate Authority/Commissioner (Appeals) within 30 days from receipt of this order, provided the petitioner deposits 50% of the disputed tax (as confirmed in the impugned order) in two instalments within two months; on compliance the Appellate Authority shall decide the appeal on merits without reference to limitation; failure to comply will permit dismissal of the appeal and enable revenue action.

Issue (ii): Whether the overdraft (OD) account maintained by the petitioner can be attached by the tax authority.

Analysis: The Court examined the nature of the bank account and the second respondent's contention that amounts in the OD account belong to the bank. Applying the principle that OD accounts represent borrowings and that sums in such accounts are not the assessee's free funds available for attachment, the Court restricted attachment of the OD account while preserving the revenue's right to proceed against assets offered as security.

Conclusion: The overdraft account cannot be attached by the tax authority; however, the tax authority is at liberty to proceed against assets (movable or immovable) provided as security, subject to the bank's rights and the outcome of any appeal.

Final Conclusion: The writ petition is disposed of by permitting an appeal on the stated conditions and by restraining attachment of the overdraft account while allowing the revenue to pursue secured assets; the matter is finally disposed of with no order as to costs.

Ratio Decidendi: Where an assessee seeks to challenge a tax demand after limitation has expired, courts may grant conditional relief permitting appeal subject to a provisional deposit of a substantial portion of the disputed tax; an overdraft account is not ordinarily attachable as the funds are the bank's and attachment may be restricted while secured assets remain available for recovery.

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