The Madras High Court recently granted relief to a Petitioner, holding that no attachment of bank account or garnishee proceedings may be undertaken against the Petitioner alleged to have averted tax liabilities, upon the payment of 25% of the disputed tax amount in question.
A Writ Petition was instituted before the Madras High Court by Tvl. Bhawar Life Style against The State Tax Officer/Commercial Tax Officer, Group I, Intelligence-I, Chennai seeking quashal of the impugned order and consequential DRC-07 Order passed by the Respondent Tax Officer.
Bhawar Life Style is a retail seller of telephone sets and other wireless network products covered under HSN Code 85171290, 85044090, 64021910 and 43031020 and conducts business operations in Karnataka, Andhra Pradesh, Kerala, Puducherry and Telangana. An inspection was conducted at the Petitioner’s place of business as per Section 67 of the Tamil Nadu Goods and Services Tax Act, 2017.
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The search at the business premises revealed significant compliance lapses, including irregularities in ITC claims and reversals, discrepancies in financial records (expenses, income, creditors, and debtors), e-way bill violations, and misclassification of transactions (non-supplies, write-offs, and asset additions). These issues indicate potential tax evasion, underreporting of income, and weak internal controls requiring immediate corrective measures.
Bhawar Life Style was issued with notice and show-cause notice in Form DRC-01A on 13.12.2023 and 10.04.2024 respectively, followed by three reminder notices dated 15.05.2024, 23.05.2024 & 27.05.2024, coupled with an opportunity for personal hearing.
The Petitioner claimed to have been unaware of all of the intimations, contending that the notices and orders had been uploaded under the “view additional notices and orders” tab on the GST Portal, thus being unable to participate in the adjudication proceedings.
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A Single-Judge Bench of Justice Mohammed Shaffiq set aside the impugned Order while ordering the Petitioner to deposit 25% of the disputed taxes within a period of four weeks from the date of the Order, inclusive of any amount that had been paid out as taxes or deposited as pre-deposit for the appeal.
The Bench clarified that if any recovery proceedings by means of attachment of Bank Account or Garnishee proceedings had been undertaken against the Petitioner, and were in-force at the time, the same would stand lifted/withdrawn upon the payment of the 25% disputed tax as directed by the High Court.
Bhawar Life Style was represented by J.Poojesh while Additional Government Pleader, C.Harsha Raj appeared for the Revenue.
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