Court emphasizes the importance of proper notice in tax proceedings, allowing a petitioner to contest discrepancies before enforcement actions are taken.

ORDER

Mrs.R.Vasanthamala, learned Government Advocate takes notice for the respondents 1 & 2.

2. The relief sought in this writ petition is to quash the Order dated

17.02.2025 passed by 1^st respondent and to direct the 2^nd respondent to defreeze the petitioner's Bank Account.

3. The learned counsel for the petitioner submitted that the petitioner is engaged in the business of manufacturing of machinery components and allied services. The petitioner has been duly filing their returns and paying all the statutory taxes. However, on scrutinization of the returns filed by the petitioner for the Financial Year 2020-21, following discrepancies were inter-alia noticed:

(i) Output Liability mismatch in GSTR-1 and GSTR-3B (ii) Input Mismatch (GSTR-3B Vs. GSTR-2A)

Hence, 1^st respondent issued a Notice in Form GST DRC-01A dated 18.11.2024 and a Show Cause Notice in Form GST DRC-01 dated 19.11.2024, followed by three Reminder Notices dated 13.01.2025, 25.01.2025 & 03.02.2025. However, the petitioner neither replied to the notices issued by 1^st respondent nor appeared for personal hearing before 1^st respondent. Hence, 1^st respondent has passed the impugned Order in Form GST DRC-07 dated 17.02.2025, confirming the demands proposed in the Show Cause Notice and directing the petitioner to pay the demand of Rs.14,20,714/- comprising tax, interest and penalty. Subsequently, 2^nd respondent has issued a Bank Attachment Notice in Form GST DRC-13 dated 22.05.2025 to 3^rd respondent Bank (petitioner's Banker) seeking to recover a sum of Rs.16,02,009/- from the petitioner's Bank Account towards the tax dues arising out of the impugned order of assessment. Pursuant to the issuance of said Bank Attachment Notice, 3^rd respondent Bank has freezed the petitioner's Bank Account.

3.1. It is also submitted by the learned counsel for the petitioner that both the Show Cause Notice and the impugned order of assessment had not been served to the petitioner either by tender or by way of RPAD, instead, the same had been uploaded in the GST portal. Therefore, the petitioner was unaware of the proceedings initiated by 1^st respondent and was also unable to participate in the adjudication proceedings. It is also submitted by the learned counsel for the petitioner that if the petitioner is provided with an opportunity, the petitioner would be able to explain the alleged discrepancies.

3.2. The learned counsel for the petitioner has placed reliance on the order passed by this Court in the case of M/s.K.Balakrishnan, Balu Cables Vs. O/o. The Assistant Commissioner of GST & Central Excise in W.P.(MD)No.11924 of 2024 dated 10.06.2024, to submit that in similar circumstances, this Court has remanded the matter back to the respondent, subject to the payment of 25% of the disputed tax by the petitioner therein.

3.3. The learned counsel for the petitioner further submitted that the petitioner is ready and willing to pay 25% of the disputed tax amount and that on such payment, attachment made in petitioner's Bank Account may be ordered to be lifted and one final opportunity may be granted to the petitioner to put forth their objections to the proposal before the Adjudicating Authority, to which, the learned Government Advocate appearing for the respondents 1 & 2 does not have any serious objection.

4. By consent of learned counsel on both sides, this Writ Petition stands disposed of on the following terms:

(a) The impugned order dated 17.02.2025 passed by 1^st respondent is quashed.

(b) The petitioner shall deposit 25% of the disputed tax as agreed by the learned counsel for the petitioner, within a period of four weeks from the date of uploading of web copy of this order without waiting for the receipt of a certified copy of this order.

(c) If any amount has been recovered or paid out of the disputed tax, including by