Frozen Bank Account Halts Business Operations: Orissa HC Directs Taxpayer to Seek Remedy from GST Dept [Read Order]

In a recent ruling, the Orissa High Court has clarified that taxpayers whose bank accounts are frozen due to GST (Goods and Services Tax) proceedings must first approach the designated GST authorities before seeking judicial intervention.

The petitioners, Pawan Kumar Sundarka & Ors. engaged in regular business transactions, had approached the High Court under Article 226 of the Constitution, seeking a direction to defreeze their current bank account, which had been frozen by HDFC Bank based on a notice from the GST department. The freezing of the account had paralyzed their day-to-day operations, making it difficult to carry out even routine financial transactions.

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However, the counsel appearing on behalf of the bank submitted that the account was frozen only on the instructions of the GST department, particularly the jurisdictional State Tax Officer-cum-CT & GST Officer, Cuttack-1, and that any remedy must lie first before the said authority.

Justice Dr. S.K. Panigrahi observed that the hardship caused to the petitioners due to the account freeze, it would not be appropriate to bypass the statutory mechanism provided under the GST Act.

The Court directed that the Petitioners should first approach the State Tax Officer-cum-CT & GST Officer, Cuttack-1, clarifying the situation and seeking redressal.

The bench accordingly disposed of the writ petition with a direction that the petitioners submit a proper representation to the GST Officer within ten working days, and in turn, the GST authority shall consider their representation and pass a reasoned order after granting them an adequate opportunity of hearing within two weeks from the date of such submission.

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