M/S. Pinakini Outsourcing Agency vs. State Of Andhra Pradesh

Held

The High Court held that the writ petition lacked merit at the outset because the petitioner had challenged the consequential order without challenging the substantive order. The Court noted that the reason provided in the Form GST DRC-13 notice adequately explained why the bank account of M/s. Pinakini Outsourcing Agency was frozen. This reason was that services were supplied under the name of M/s. Pinakini Outsourcing Agency, but the bills were raised under the GSTIN of M/s. Pinakini Traders, and the bank account in question was used for receiving payments from government departments via CFMS. Therefore, the freezing of the account was deemed necessary to safeguard the revenue. The Court dismissed the writ petition, but left it open for the petitioner to pursue legal recourse to challenge the substantive order, if permissible under law. No order as to costs was made.

Facts

The petitioner, M/s. Pinakini Outsourcing Agency, filed a writ petition challenging a notice in Form GST DRC-13 dated January 12, 2022, issued by the Assistant Commissioner (ST), Nellore, and the subsequent transfer of Rs. 20,80,000/- from their State Bank of India account on January 29, 2022. The petitioner sought to declare these actions illegal and arbitrary, requesting the setting aside of the notice and the remittance of the transferred amount back to their account. The respondent authorities contended that the alleged liability pertained to M/s. Pinakini Traders, but the bank account used for receiving payments was that of M/s. Pinakini Outsourcing Agency, with Mr. K. Malyadri being the common Managing Partner for both entities. The notice indicated that services were supplied under the name of M/s. Pinakini Outsourcing Agency, but bills were raised under the GSTIN of M/s. Pinakini Traders, and the bank account was used for receiving payments from government departments.

Key Issues

1. Whether the action of the 3rd respondent in issuing the notice in Form GST DRC-13 dated January 12, 2022, and the subsequent action of the 4th respondent in transferring Rs. 20,80,000/- is illegal, arbitrary, contrary to law, violative of principles of natural justice, and violative of Articles 14 and 19(1)(g) of the Constitution of India, particularly when the petitioner argues that the consequential order was challenged without challenging the substantive order. Petitioner's Contention: The petitioner argued that the alleged liability was in respect of M/s. Pinakini Traders, but the bank account belonging to M/s. Pinakini Outsourcing Agency was frozen. They sought to set aside the notice and direct the remittance of the funds. Revenue's Contention: The revenue contended that the notice in Form GST DRC-13 was issued because verification revealed that services were supplied under the name of M/s. Pinakini Outsourcing Agency, but bills were raised under the GSTIN of M/s. Pinakini Traders. The bank account of M/s. Pinakini Outsourcing Agency was used for receiving payments from government departments, thus necessitating the freezing of the account to protect the state exchequer.