Velusamy M vs. The State Tax Officer

Facts

The petitioner, M. Velusamy, filed a writ petition challenging a recovery notice (GST DRC 13) dated 09.06.2023, issued by the State Tax Officer, Karur (first respondent). The petitioner claimed to have closed his business in January 2023 and was unaware of the preceding assessment order. He also stated he had not been served with the assessment order, yet his bank account with Indian Bank (second respondent) was frozen. The petitioner expressed willingness to deposit the tax due, without interest and penalty, and sought an opportunity to file a reply to the notice.

Held

The Court directed the second respondent (Indian Bank) to de-freeze the petitioner's bank account, provided the petitioner deposits the entire tax due, without interest and penalty, within thirty days of receiving the order. If sufficient balance exists, the bank is to transfer the amount to the first respondent towards deposit. The petitioner is permitted to file a reply to the Notice in DRC 01, dated 25.11.2024, treating the impugned Assessment Order, dated 17.02.2025, as an addendum. The first respondent shall then pass fresh orders on merits after considering the reply. Failure to comply with these stipulations would allow the first respondent to proceed as if the writ petition was dismissed. The ratio is that procedural fairness and an opportunity to be heard should be provided, even if it involves a deposit of tax dues, when there are claims of non-service and lack of awareness of proceedings.

Key Issues

1. Whether the petitioner is entitled to an opportunity to file a reply to the notice and to have the assessment re-done, given his claim of business closure and non-receipt of the assessment order? (Mixed question of law and fact, concerning principles of natural justice and procedural fairness under the CGST/TNGST Act, 2017). Petitioner's contentions: The petitioner argued that he was unaware of the assessment proceedings due to business closure and non-service of the assessment order. He sought an opportunity to file a reply and for the assessment to be re-done, offering to deposit the tax due without interest and penalty. Revenue's contentions: The judgment records the appearance of the Additional Government Pleader for the first respondent, but does not explicitly detail their arguments. However, the Court's directions suggest an implicit acceptance of the petitioner's plea for a fresh opportunity, subject to conditions.