Business Closed, Unaware of GST Notices: Madras HC allows to Contest Order on Payment of Dues without Interest and Penalty [Read Order]

Subject to depositing the entire GST due without penalty and interest, the court was permitted to contest the order in fresh.The Madurai Bench of the Madras High Court recently permitted an assessee to contest a GST ( Goods and Services Tax ) order on the condition of paying the tax dues without any interest and penalty.

The Court also directed the immediate defreezing of the taxpayer’s bank account, which had been attached following the assessment. The petitioner made his willingness to pay whole GST dues without interest and penalty, which was approved by the bench.

The petitioner, M. Velusamy, approached the High Court challenging a recovery notice in GST DRC-13 dated 09.06.2025 issued by the State Tax Officer, Karur.

The petitioner contended that he had closed his business as early as January 2023 and therefore remained unaware of any notice or proceedings leading up to the impugned assessment order dated 17.02.2025.

It was argued on behalf of Velusamy that he had never been served with the assessment order and came to know about the proceedings only after discovering that his account with the Indian Bank had been frozen by the tax authorities.

The petitioner pleaded for an opportunity to file a proper reply and sought lifting of the bank attachment to revive his ability to meet statutory dues.

Appearing for the petitioner, Adv. T.A. Ebenezer submitted that the assessee was willing to deposit the entire tax demand but without paying any interest or penalty, if given an opportunity to contest the order afresh.

After considering submissions from both sides, Justice C. Saravanan observed that the petitioner’s request appeared bona fide and that principles of natural justice warranted a fresh opportunity to contest the assessment, given the closure of the business and lack of notice.

The court ordered that “Having considering the arguments advanced by the learned counsel for the petitioner, learned Additional Government Pleader for the first respondent and learned Standing Counsel for the second respondent, this Court is inclined to direct the second respondent to de-freeze the petitioner's account, subject to the petitioner depositing entire tax due, without interest and penalty within a period of thirty (30) days from the date of receipt of a copy of this order.”

Also read: Imposition of Penalty though GST Paid: Madras HC Dismisses Petition andAllows 15 Days to File Appeal Despite Lapse of Limitation [Read Order]

The High Court therefore directed the second respondent, Indian Bank, to defreeze the petitioner’s account, subject to the petitioner depositing the entire tax due within thirty days from the date of receipt of the order.

If sufficient balance was available in the frozen account, the bank was directed to transfer the amount to the credit of the GST Department towards the tax dues, without prejudice to the petitioner’s right to contest the case in fresh proceedings.

The Court further permitted Velusamy to file a detailed reply to the earlier DRC-01 notice dated 25.11.2024, treating the earlier assessment order as an addendum to the same. The State Tax Officer was directed to pass fresh orders on merits and in accordance with law after considering the petitioner’s reply, preferably within three months from the date of filing the reply.

However, the Court cautioned that if the petitioner failed to comply with the conditions of tax deposit within the stipulated time, the authorities would be at liberty to proceed with recovery as if the writ petition had been dismissed at the outset.

With these directions, the writ petition was disposed of, providing a fair opportunity to the petitioner while balancing the revenue’s right to recover legitimate dues.

The court, with these directives, gave the petitioner a fair chance while preserving the revenue's right of recovering legitimate debts.

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