In a recent ruling, the Madurai Bench of the Madras High Court directed the State Tax Officer to refund an amount prematurely debited, criticizing the freezing of the petitioner’s bank account despite the pending appeal.
Vadivel Coco Tech Private Limited filed a writ petition challenging an assessment order dated 28.08.2024 and a subsequent rejection of their rectification application dated 29.10.2024 by the State Tax Officer.
The petitioner’s counsel argued that the orders were issued in violation of natural justice principles and were excessive. The petitioner pursued an appeal with the appellate authority on 03.01.2025 notifying the respondent and providing acknowledgment of the filing.
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On the same day, the respondent issued an attachment order to the petitioner’s bank which led to the debit of the entire amount determined in the assessment order. The petitioner’s counsel argued that they still had time until 28.01.2025 to file an appeal as per the law since the limitation period begins from the date of the rectification order.
The GST department’s counsel argued that the arrears were unpaid justifying the attachment order and subsequent debit. The department counsel admitted that the petitioner’s appeal was later acknowledged and they were eligible for a refund.
The petitioner argued that the funds were withdrawn after the appeal was filed and acknowledged violating the limitation period allowed for such appeals. The petitioner further argued that the premature withdrawal of funds was both excessive and arbitrary.
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Justice K. Kumaresh Babu observed that the petitioner was entitled to a refund because the appeal was filed within the prescribed limitation period and admitted. The court observed that the respondent had acted prematurely by proceeding with the debit before the appeal was resolved.
The court directed the respondent to refund the amount within two weeks without requiring the petitioner to file a separate request. The court disposed of the writ petition allowing the petitioner to pursue their appeal with the appellate authority.
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