TaxTMI 
TaxTMI 
2026 (7) TMI 1341
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.... Meenakshi COMMON ORDER In these writ petitions, the respective petitioners have prayed for the following reliefs:- S. No. Writ Petition No. Name of the Petitioners Relief 1. W.P.No.3204 of 2024 CBIGS Apparels and Jewels, Partnership Firm Rep. by its, Authorized Signatory S.Nagarajan, Writ Petition filed under Article 226 of the Constitution of India, for issuance of a Writ of Certiorarified Mandamus calling for the records of the second respondent in respect of the letter dated 19.10.2023 issued to the respondents 4 to 6 and quash the same as illegal, arbitrary and devoid of merit and consequentially permit the petitioner to operate the bank accounts with the Respondents 4 to 6 herein without any hindrance. 2. W.P.No.1652 9 of 2024 Mrs.N.Seetha, Writ Petition filed under Article 226 of the Constitution of India, issuance of a Writ of Certiorarified Mandamus calling for the records of the second respondent respect of the letter dated 19.10.2023 issued to the fourth respondent and quash the same illegal, arbitrary and devoid of merit and consequentially permit the petitioner to operate the bank account with the fourth respondent therein with....
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....mpanies (Winding Up) Rules 2020; (iv) The Provisional Liquidator is permitted to initiate appropriate action in accordance with the provisions of the Companies Act, 2013 and to take control of the subject Company. (v) Post this matter for hearing on 24.06.2024. (vi) The Registry of this Tribunal is directed to communicate this order to the parties concerned and also to the Official Liquidator." 5. By another Order dated 20.03.2024, the National Company Law Tribunal (NCLT) recorded that the said company, namely, CBIGS Advertising Private Limited, had issued statutory notices to all concerned statutory authorites, including the Regional Director, the Registrar of Companies (Southern Region), the Income Tax Authorities, and GST Authorities. 6. It is informed that, by a subsequent order dated 29.10.2025, the NCLT appointed the said provisional Liquidator as the Liquidator of the said company. 7. The recovery proceedings have been initiated against the petitioners in W.P.Nos.3204 of 2024 and 6074 of 2026, primarily on the ground that the petitioner in W.P.No.16529 of 2024, namely Mrs.N.Seetha, was a Director of the defaulting company, namely, CBIGS Ad....
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....f 2026, namely Yantur Manufacturing Private Limited. 14. Mrs.N.Seetha, the petitioner in W.P.No.16529 of 2024, has also challenged the attachment of her bank account, which has been effected on account of the tax liability allegedly incurred on account of the company, namely M/s. CBIGS Advertising Private Limited, being liquidated in which she had served as a Director. 15. The learned Senior Counsel for the petitioner in CBIGS Apparels and Jewels (W.P.No.3204 of 2024) submits that five different accounts, including two overdraft accounts maintained by the partnership firm, have been attached. As a result, the entire operations of the said petitioner partnership firm has been affected. It is further submitted that the partnership firm is no longer associated with Mrs.N.Seetha, the petitioner in W.P.No.16529 of 2024. 16. The learned Senior Counsel also submits that its accounts maintained with Axis Bank, ICICI Bank and HDFC Bank have been unfairly attached by the Commercial Tax Department on the arrears of M/s. CBIGS Advertising Private Limited. 17. The details of the bank accounts maintained by the petitioner partnership firm in W.P.No.3204 of 2024, namely CBIGS Apparels....
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.... assessment order, this respondent issued recovery notice in GSTIN 33AADCC5603K1ZW dt. 25.9.2023. As there was no response from the petitioner in respect of the recovery notice issued, this respondent is left with no other alternative except issue bank attachment, as the arrear payable by the petitioner is huge. Aggrieved by the attachment issued the petitioner filed the above writ petition. 7. With regard to para 3-6 of the affidavit, it is submitted that though the said ex-partner Mrs. Seetha, retired from the company, but she is continuing as the authorized signatory/representative of the petitioner Hence, at the time of accrual of demand, the said Mrs. Seetha is partner of the said firm. Therefore, she is responsible for the liabilities of the company, when she was partner of the petitioner firm. Verification of the returns filed by the petitioner for the year 2017-18 revealed that the petitioner undertaken/carried on the business during the relevant period but have not discharged their tax liability besides passing on of irregular ITC. Verification of datasheets pertaining to relevant fields in the GSTR 1, 2A and 38, revealed that the petitioner had not filed even a s....
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....lity of the petitioner to intimate the incoming and outgoing partners to the department, to fix the responsibilities arose in such cases. Only after the attachment made the eptitioner intimated the fact that Mrs.Seetha's name was removed from the company portal. Thus the petitioner had intentionally with malafide intention removed her name from the portal on issue of attachment. 10. With regard to para 12-13 of the affidavit, it is submitted that section 89 of the CGST/TNGST Act 2017, provides that (1) notwithstanding anything contained in the Companies Act, where any tax, interest or penalty due from a private company in respect of any supply of goods or services or both for any period cannot be recovered, then, every person who was a director of the private company during such period shall, jointly and severally, be liable for the payment of such tax, interest or penalty unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company Thus, it is proved beyond doubt that the said Mrs. Seetha. Director of the petitioner firm has failed to settle the dues to the Exchequer T....
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.... petitioner on the demand raised, this respondent is left with no other alternative except to invoke section 79 of the Act to recover the revenue legitimately due to the Government Exchequer. Hence, any stay granted to the collection of revenue by the Hon'ble Court put this respondent into great hardship in collecting the huge demand. Hence, it is submitted the no stay could be granted and the attachment released without payment of demand. 14. With regard to Ground (a-e) of the affidavit, it is submitted that there is no violation of principles of natural justice in attaching the bank accounts of the petitioner, as the demand is huge and there is no alternative except to attach the bank accounts for the collection of demand. All the procedures laid down under section 79 of the Act was followed before issuing attachment notice. There is no requirement of prior intimation to the petitioner for attaching the bank accounts, and if done so it would make way for the petitioner to clear the amount in their accounts. But it is submitted that there was sufficient time for the petitioner from the date of passing of impugned orders to make payment. Also it is not the duty of the ....
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....o certain facts for complete appreciation of the case as follows:- (i) I submit that the petitioner is a Partnership concern and is maintaining the following Accounts as narrated in the tabular column below:- S.No. Account bearing numbers Nature of Account Branch 01. 917020020170502 Current A/c Adyar Branch 02 923030005944472 Overdraft R.A.Puram Branch 03 919030097537634 Overdraft R.A.Puram Branch (ii) I submitt that this Respondent Branch received a communication dated 19.10.2023 from the 2nd respondent to mark lien relating to PAN numbers ADWPS4414K, AAKFC9121E and AAEPK9856G and furnish the details relating to the Bank account maintained by the petitioner. In compliance of the communication dated 19.10.2023, a lien was accordingly marked amounting to Rs. 2,66,42,308/- in all the aforementioned bank accounts narrated in the tabular column above. This Respondent also brought it to the notice of 2nd Respondent vide letter dated 21.10.2023 that the account under the pan number AAEPK9856G stands closed stands during the year 2011 itself and no statements are available at the moment besides lien has been marked in the P....
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....I state that the Respondent No 3 in his counter affidavit has mistaken the defaulted taxpayer M/s CBIGS Advertising Private Limited as the Petitioner and in para 5 and 6 of the counter affidavit addressed the defaulted taxpayer as Petitioner. The Petitioner has filed all the relevant returns to the GST department from the inception till today and the auditor certified copy is also available. 12. I state that in para 7 of the counter affidavit, it is stated the Mrs. Seetha ex-partner of the Petitioner was the authorized signatory of the Petitioner at the time of accrual of demand and that she is responsible for liabilities of the company. Also, in para 7 it is stated that Petitioner has not even filed a single GSTR-3B in 2017-18. 13. I state that this writ petition is not contesting whether dues are recoverable from Mrs. Seetha or not, this petition is filed on the basis that recovery of dues from the Petitioner on account of defaulted taxpayer. Further as stated earlier the Petitioner has filed all their GSTR-3B for tax period 2017-18. It is pertinent to note that Mrs. Seetha was only an authorized signatory on the GST portal for filing of returns but was not a pa....
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.... returns then he first ought to have issued notice in ASMT-13 which the Respondent No 3 has not. Further it is stated in the circular in para 4(vi) In case the defaulter furnishes a vaild return within thirty days of the service of assessment order in FORM GST ASMT-13, the said assessment order shall be deemed to have been withdrawn in terms of provision of sub-section (2) of section 62 of the CGST Act. However, if the said return remains unfurnished within the statutory period of 30 days from issuance of order in FORM ASMT-13, then proper officer may initiate proceedings under section 78 and recovery under section 79 of the CGST Act; 20. I state that the Respondent No 3 has not followed standard operating procedure laid in the circular and directly issued notice u/s 79 of the said Act without serving notice and subsequent order to FORM ASMT-13. Reliance is placed on the judgement passed in the matter of V N Mehta & Company vs Assistant Commissioner, HQ Preventive unit, Chennai by the Honourable Madras High Court in W.P. 26187 of 2019 dated 08th November 2019 where the facts are identical to the Petitioner's case since Respondent No 3 has straight away resorte....
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....the Respondent No. 3's negligence and misunderstanding of the entire petition. The directors of the company presently are Mr Krishnan and his associates having all banking operations and management control from 2015 onwards and they are not in any manner whatsoever related to the Petitioner and have never been part of the partnership firm. 24. I state that the action of attaching an overdraft and loan account facility is not in accordance with law. An overdraft facility and loan account is a credit facility that a bank extends to its customer, the unutilized limit is not the property of the customer in the instant case of the Petitioner. With an overdraft facility the customer is the debtor and the bank is the creditor so the bank does not hold any money of the customer. The operations have been disrupted by the the 3rd Respondent in freezing the bank accounts including the overdraft facility which is not even an asset of the Petitioner. Reliance is placed on several judgements to prove that an overdraft facility/cash credit are not supposed to be attached by Revenue authorities to recover any dues. 25. I state that the contents of the remaining paragraphs in ....
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....e either the Past or Present directors. 30. 1 state that the audited IT return filed by CBIGS Advertising Pvt Ltd to IT, ROC and to NCLT the statutory liability is only 25 Lakhs appx. Hence it shows there is dispute between the Respondent 3 and the defaulted company. The Defaulters company has written to the GST department about the liquidation with NCLT long back and also responded to GST Suppressing this fact and attached the bank accounts of the Petitioner's company is illegal. 31. I state that the Petitioner Firm has two OD/Loan accounts with Axis Bank bearing AC. No.919030097537634 & AC.No.923030005944472. Both the Loan/OD accounts have been opened only after Mrs. N. Seetha retired as the partner and after change of partnership deed in the year 2019 itself. The partners and the signatories post change of partnership deed are Mrs. Preethika and Mr. Kandarp Pandya and the property owned by Mrs. Preethika have been given to the bank as a security to avail the OD/Loan account. As such, now the bank is threatening to proceed with attaching the property and take possession. Therefore, the attachment of OD/Loan account is unjust, illegal and also not in the prac....
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....a director of such company at any time during the period for which the tax was due shall, jointly and severally, be liable for the payment of such tax, interest or penalty, unless he proves to the satisfaction of the Commissioner that such non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. 26. Section 88 of the respective GST Enactments, which reads as under:- "Section 88. Liability in case of company in liquidation (1) When any company is being would up whether under the orders of a Court or Tribunal or otherwise, every person appointed as receiver of any assets of a company (hereafter in this section referred to as the "liquidator"), shall, within thirty days after his appointment, give intimation of his appointment to the Commissioner. (2) The Commissioner shall, after making such inquiry or calling for such information as he may deem fit, notify the liquidator with three months from the date on which he receives intimation of the appointment of the liquidator, the amount which in the opinion of the Commissioner would be sufficient to provide for any tax, inter....
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....untenanced, as the petitioner in W.P.No.16529 of 2024 namely Mrs.N.Seetha was the initial partner of the said firm, after the execution and registration of the partnership deed on 13.11.2015 and continued after default was made in the said company. 31. Merely, because, the petitioner in W.P.No.16529 of 2024 resigned subsequently only on 28.06.2019, and in her place, her son-in-law, namely Mr.Kandarp Pandya, was inducted as a partner along with her daughter, namely Mrs. Preethika for the Petitioner therein in W.P. No. 3204 of 2024 is of no anvil. Incidentally, Mrs.N.Seetha, the petitioner in W.P.No.16529 of 2024, and her husband, namely Mr.S.Nagarajan, and also their daughter, namely Mrs.Preethika, were promoters / directors of the defaulting company, namely CBIGS Advertising Private Limited. Therefore, all are liable to be proceeded under Section 88(3) of the respective GST Enactments. 32. Therefore, the challenge to the impugned communication issued to R4 to R6 impugned in W.P.No.3204 of 2024 on account of tax arrears from the directors of the defaulting company, namely CBIGS Advertising Private Limited from its directors, namely Mrs.N.Seetha, the petitioner in W.P.No.16529 ....